While most eBooks have the tendency to inform readers about what they should do, seldom do game developers know what not to do when growing their games.
In this eBook, you’ll learn all about the most common mistakes made by game developers today, and what you can do to avoid them, offering concrete tips on how to accelerate your app’s growth, from correctly identifying marketability, to understanding incrementally and focusing on the metrics that matter. We will go over the top 10 mistakes made by game developers today, and what you can do to avoid these costly mistakes.
A good game doesn’t necessarily mean a good business
It may not be obvious, but there can be a significant difference between a good game and a good game business. You may have designed the most incredible game, the graphics are beautiful and the gameplay is compelling - but that doesn’t necessarily mean that users will install your game at scale.
Often, game developers are too focused on the game itself - determining business health and evaluating whether to launch a game or not based on metrics such as retention and ARPU, rather than on marketability. Marketability answers the question of whether or not there is even a market of users who want to download your game.
It’s common for game developers to assume that if their monetization are good, then they will also be able to run successful UA campaigns, but that’s not always the case. Successful UA is not just about how high you’re able to bid for an install, but about whether there is a big enough market for your game in the first place.
In that sense, it’s possible that a low ARPU game with high marketability ends up earning more in revenue over time than a high ARPU game that’s having difficulty scaling and acquiring users. More importantly, if there is no market for your game, your UA campaigns won’t scale and you won’t be able to grow your user base, effectively killing your game almost at birth.
"Successful UA is not just about how high you’re able to bid for an install, but about whether there is a big enough market for your game in the first place."
Take a look at these graphs examining both retention and ARPU for the first D30 days of a cohort of two different games.
Most game developers will kill off Game B too soon. Why? Game A generated $1.05 in the first 30 days, whereas Game B generated only $0.25 in the first 30 days. Based on this data, the studio would choose to launch Game A and kill off Game B.
But imagine that in this scenario, Game A also has no market - i.e. too few users willing to download it - and all the high retention and ARPU in the world won’t help it. Whereas Game B has a massive market, and therefore a way to acquire users cost effectively. The economics of scale would allow Game B to thrive.
For that reason, if game developers want to truly answer if Game A or Game B is a better business, they must consider the marketability of the game. To measure marketability, start by looking at these metrics.
IPM - or installs per mille - is a metric that simplifies the top of the funnel and combines CTR and CVR. Essentially, IPM tells you how many people out of 1000 who see your ad will end up playing your game at least once. Although the metric is often overlooked by marketing teams, it is critical for understanding how user acquisition campaigns are performing relative to the market at large.
For example, if campaign A has an IPM of 5 and campaign B has an IPM of 10, clearly, the market prefers Campaign B over Campaign A.
eCPM - or effective cost per thousand ad impressions - is mostly used to measure ad monetization performance. While this metric is typically used by ad monetization teams, it’s actually much more important for user acquisition managers.
Why? eCPM gives UA managers a clue about how strong the buying power of their campaign is. If your ads are converting well and generating a high eCPM, you will get access to more impressions, which drives more installs and better performance. This in turn will give you more impressions, and so on in a virtuous cycle of growth. Therefore, the more marketable your game is, the higher your eCPM will be, and the more buying power you have within the market. It can also be translated to higher profits - the ability to acquire users for lower CPIs at high volume.
Want to understand where you stand in terms of your buying power? Discuss it with your marketing channels. By increasing your eCPM, chances are you’ll receive more incremental installs. Yes, sometimes increasing CPI hurts margin. But, it could be worth it. The higher the CPI, the higher you’ll place in the waterfall, and the more users you’ll be able to acquire that should generate increased profit for you. You can also can drop your bids. Doing so will lower your eCPM, but if you have competitive volume, you won’t suffer as much and you’ll end up with higher profit.
So, what’s the mistake here? Not evaluating or optimizing top of funnel metrics like IPM when considering whether or not launch your game. If you’re only focused on understanding LTV and how high your CPI can be, you’re clueless on what your potential buying power or eCPM is.
Head to LevelUp to get an in-depth breakdown on how to increase marketability.
Ignoring ad revenue in your UA strategy
For any game making a significant amount of their revenue from ads, one of the biggest - and most costly - mistakes they can make is not factoring in ad revenue to their marketing efforts.
Up until recently, the only way to optimize UA spend according to user quality was by measuring IAP revenue post-install. But this only gave developers half of the picture (or in the case of ad-heavy genres like hyper casual games, only a very tiny slice of it). Without being able to track ad revenue generated per user and then link that back to marketing spend, developers were unable to identify high-performing sources and optimize their UA bids accordingly.
Imagine you didn’t take ad revenue into account. You examined a specific campaign source and thought that you were acquiring low-LTV users. However, in reality, the users you acquired were not valuable in terms of IAP revenue, but in fact, they were extremely valuable in terms of ad revenue.
With App Annie projecting that revenue from ad monetization will more than double by 2020 to $120B globally, ad whales are beginning to be just as important as IAP whales. But without ad revenue data, developers are blind to potentially significant marketing sources.
Not leveraging existing IPM benchmarks
How can you measure and improve your UA campaigns if you don’t know where you stand next to your competitors? Once you’ve launched a creative campaign, it’s essential to set goals according to industry benchmarks.
As we mentioned previously, IPM is central for game developers evaluating the marketability of their game. Talk to your marketing channel about where you stand against other games in your genre and what you need to do to improve IPM. It’s also important to remember that IPM can fluctuate between different genres of games. Every game genre has different benchmarks and it’s crucial that game developers compare themselves to not just games in general, but to each sub-category.
Benchmarks are important because they give you actionable targets for creative optimization. If your campaigns are coming in under category benchmarks, you can leverage creative optimization to significantly increase IPM. Not only can you achieve benchmarks, but you may even surpass them to make your CPI bids go even further.
Pro tip: Benchmarks aren’t law and there are always exceptions. This is why it’s crucial to test your creatives and iterate them accordingly. For example, chances are that an app that utilizes a successful IP will most probably have a higher IPM. How can you increase your IPM? Find out on the next page.
Ignoring creatives
Creatives are the most powerful weapon when it comes to acquiring new users. There is a world of data that can be leveraged between the impression and the click. With the rise of interactive ad units like playables and interactive video ads, developers now have access to data that up until recently has been inaccessible but can inform strategies to optimize the in-ad experience, and help developers know exactly who their audience is (and how they engage with both the ads and the game itself).
Sophisticated creative optimization leverages in-ad data, allowing for much deeper creative analysis that goes beyond the industry standards that measure solely the volume of impressions. When game developers utilize in-ad data, and then use those insights to iterate and optimize their creatives, they’ll end up finding the one (or few) creative(s) that generate the highest IPM - and this is what will drive the success of their game.
As we mentioned earlier, eCPM is influenced by IPM. Therefore, the more installs your creatives are generating, the stronger your buying power is.
Ignoring ASO for UA
Usually, when we hear ASO, we think about discoverability in the app stores - but app store optimization is actually more critical for user acquisition and one of the biggest factors after creatives when it comes to impacting IPM. Why? Users who click on an ad ultimately land on your app store page, and this is where and when they will decide whether to download or not. Often, this part of the conversion funnel isn’t measured. But we see a big difference in profit between the teams that have figured this out and those that haven’t.
How do you do it? There are many ways to improve ASO. For example, focus on app ratings and reviews. We see that 67% of the top 100 free iOS apps have achieved a 4-star rating or better.
What’s more, make sure that your app store page matches your creatives. That includes app icon, text, images, and videos. If they liked your ad enough to click through to the store, they’ll probably like your game - as long as the store doesn’t show a different game than they were promised in the ad.
Not understanding attribution well enough
While it can represent a complex and confusing part of the industry, it’s important that developers have a deep understanding of attribution and how it works. Successful game developers should be familiar with attribution windows, the impact of limiting ad tracking, fingerprinting methods, and more. Why? If you don’t understand how attribution works, you won’t understand what factors are working against it and you might miss instances of mobile ad fraud in your UA campaigns. One such factor is attribution manipulation.
Attribution manipulation is a practice where fraudulent sources take credit for organic installs or installs that should be credited to other marketing channels. Often, UA managers mistakenly think their campaigns are performing well - ROI is looking great as players are spending money within the game (since they are organic users in many cases, this is hardly surprising). But what they don’t understand is that some of these users never saw or clicked on an ad before their installed, or actually installed the app from an ad through another marketing channel.
Without understanding the bigger attribution picture, you might be tempted to say: “so what? My numbers look good.” But in the end, ignoring this issue hinders your ability to grow your titles successfully. Since the campaigns on the legitimate marketing channel aren’t getting credited for the install, the campaign’s IPM in that channel drops. As a result, the eCPM drops, which lowers your impression volume significantly and your overall user reach, ultimately driving installs down. Now, this game is missing out on the opportunity of acquiring potentially high-value users cost-efficiently. Essentially, by turning on fraudulent channels, not only are you hurting organics but also the legitimate channels that are actually driving value.
Be sure that you’re only working with incremental channels, or channels that increase your overall users. Once campaigns go live on certain channels, usually growth teams focus on the individual channel itself (how it performs, how it’s pacing, how it’s delivering), and they don’t look at the overall picture.
But if go back in time and look at overall data stacked in an area chart, you’ll see cases where channels went live and overall installs did not go up at all. Does this mean the channel is fraud? Not necessarily. Does it mean it has no value? Maybe. At the end of the day, when you turn a channel on, you’re spending more money. So ask yourself, should I keep spending money a channel that’s not bringing me any users?
Lastly, it’s important to implement the same attribution windows across all channels and platforms. The standard windows are 7 days for clicks and 1 day for views, but often we see that windows are inconsistent. However, this makes it impossible to “compare apples to apples” and make intelligent decisions on how you’d like to optimize those windows going forward. Essentially, without a level playing field, your decisions are skewed from the start.
Head to our YouTube channel to watch ironSource’s VP Growth talk about everything attribution.
Treating all your ad units the same
It’s nothing new to point out that ad units vary and users respond to them in different ways, but what’s often missed is the critical difference between ad placements, and how the context in which a user encounters an ad can have vast differences on an ad’s impact on revenue and retention. Savvy developers will craft the perfect mix of ad placements - one that leverages the placements’ strengths and mitigates their cons to drive maximum revenue. There are two different types of ad placements: system-initiated ads and user-initiated ads.
Think of a system-initiated ad as an ad monetization tool that is forced on users. With these types of ads, the developer decides when to place them and how often users engage with them. More often than not, they are placed at natural transition points within the loop of the game. There are three kinds of system-initiated ads: interstitial ads, banner ads, and native ads.
Meanwhile, a user-initiated ad is an engagement tool designed as a feature within the game that relies on a value exchange, in which users have the option to engage with an ad in order to enjoy something in return, such as an extra life, coins, etc. put users in control of their ad experience. There are two kinds of user initiated ads: rewarded video ads and offerwall.
It is a mistake to ignore how the placement of each ad unit impacts other touchpoints within your game. Ad placements don’t solely drive revenue, but they have an impact on both retention and engagement. Following best practices in using these tools will result in an increase in retention, session length, ARPU and user satisfaction.
With system-initiated ads, the challenge most game developers face is how to optimize them in order to balance increasing ARPDAU with decreasing retention, where the main metric to maximize is ARPU. Adding system initiated ads can harm user experience, but implementing them properly, A/B testing, and optimizing can be the differentiator between just a game and a successful business.
Theoretically, the more ads you show, the higher your ARPDAU. However, the more aggressive you are with your system-initiated ad placements specifically, the lower your retention is likely to be, as users will get frustrated seeing a lot of ads within their in-game experience and eventually drop off and leave 1-star ratings claiming “too many ads.” For example, while it’s best practice to place an interstitial ad at natural transition points within your game, should you place them at every opportunity you have? No, definitely not. Instead, choose placements carefully and conduct A/B tests to understand which ad strategy generates the highest global maximum ARPU.
If not implemented correctly, user initiated ads can cannibalize IAPs. To get around this, make sure that you’re implementing rewarded video as part of the core loop features, including revive, boost, 2x your winnings, hints, lives, etc. It’s all about determining when the best time to offer users to engage with them is.
ironSource's interstitial ads significantly increased Madbox's revenue. Read the case study to learn more about balancing system-initiated ads with user experience.
Ignoring ER and UR
Picture a situation in which your DAU is high but your revenue is low. In other words, you have a high number of users coming to your game every day, but those users aren’t collectively generating the amount of ad revenue you expect them to. How do you see where you’re going wrong? There are two possibilities: either your eCPMs are low or your impressions/DAU (the number of ads each daily active user sees) is low.
Let’s say you rule out eCPM being the problem - benchmarks suggest eCPM is on par with other apps in your category. At this point, you suspect the issue might be your impressions/DAU, which you can calculate by multiplying engagement rate (ER) and usage rate (UR).
Engagement rate is the percentage of users who are engaging with ads in your app, and usage rate is the number of ad impressions per engaged user. These metrics highlight two things: first, how many users are engaging with your ad, and second, out of those engaged users, how many ads each engaged user is seeing. ER and UR are indicative of how your players are engaging with your ads, and can be used to iterate your monetization strategy.
Good ad monetization isn’t just about how much revenue you’re driving, but about how much of your overall monetization potential you are reaching. When it comes to this question, metrics like LTV, ARPU or ARPDAU aren’t going to be able to help you. Instead, you need to look at metrics like engagement rate and usage rate, and then compare your performance to benchmarks for your category to see how good a job you’re doing of reaching maximum possible revenue for your game.
How can you increase impressions/DAU? Take a look at the two factors that make it up and see how can improve those metrics. For example, if benchmarks suggest ER is low, perhaps the traffic driver for a rewarded ad isn’t visible or its value hasn’t been clearly communicated to your users. Or, if UR is low, perhaps you’re capping the number of ads displayed to your users too soon, the rewards aren’t as valuable, etc.
So, what’s more important: improving ER or UR? Engagement rate. Why? You want more users engaging with this product as it drives overall metrics (retention, ARPU) up since it’s at the top of the funnel. Also, first impressions are always worth more, therefore you want to add more first impressions, than say, third impressions.
Jane Anderson, Head of Ad Monetization at ZeptoLab shares insights on how to successfully balance user experience with ad monetization. Listen to the podcast or skim highlights.
Failing to iterate your ad monetization strategy
It may be hard to hear, but when it comes to your ad monetization strategy, you can’t afford to go with your instinct. Instead, A/B test absolutely everything to ensure that you have a full understanding of how your players are engaging with the ads in your game, which will ultimately allow you to make smarter monetization decisions based on accurate and actionable data.
You’ll be able to answer questions like, “should I serve banner ads in Japan? Reward a user with 2 gems or 5 coins? Show interstitials on the first session?”
Let’s take introducing a new ad unit. Imagine that you’ve designed an ad monetization strategy that involves an interstitial after a level fail, but you discover that the retention of a segment of users is dropping because users aren’t continuing to play after failing that level.
With A/B testing, you can test the impact of putting a rewarded video after the level fail, thereby giving users a way to continue playing and potentially increasing retention. You can assign a test group to see the rewarded video ad at the same position, while your control group continues to see the original interstitial ad. After testing your groups, you’ll have enough data to decide which ad unit will generate higher revenue, or whichever KPI you’re measuring.
We hope that this eBook opened your eyes to some of the most common mistakes made by game developers today and what you can do to avoid them.
Before we wrap up, let’s break things down one last time:
1. Retention and ARPDAU isn’t enough. In order to ensure success, you must consider additional top of funnel metrics that measure how the market reacts to seeing an ad promoting your game.
2. Measuring ad revenue provides a holistic picture of a user’s value, beyond just what you’re generating through IAPs, so that you can optimize accordingly.
3. Compare your IPM to category benchmarks.
4. If you ignore creatives, chances are you’ll land far from the potential of the game and you’ll barely scale.
5. App store optimization will ensure your IPM will be pushed even higher, and your CPIs even lower.
6. Get as much insight into attribution as possible so you’ll be smarter in understanding how measurement works, how to set a level playing field, and how to catch who’s trying to steal your money.
7. The context in which a user encounters an ad can significantly impact on revenue and retention.
8. Monetization managers should focus on UR and ER in order to ensure they are reaching their full ad monetization potential.
9. Your gut is usually wrong, so A/B test everything.
Head to LevelUp - the place for people who love making, growing, and of course, playing mobile games. Get actionable insights on all things game design, development, and business.
Fill out this form to access in-depth expert knowledge and solutions.
