Increasing LTV, Decreasing CAC in Mobile Games with Zero-Party Data!
Increasing LTV, Decreasing CAC in Mobile Games with Zero-Party Data!
From user acquisition to retention and beyond!
The land of mobile gaming is cutthroat, oftentimes literally. While gamers are off slashing up opponents in Mortal Kombat, developers and publishers fiercely compete to acquire customers. Competing with the big dogs is a daunting task for indie developers and other small publishers. In mobile gaming, an effective business model is one with a higher LTV (customer lifetime value) than CAC (cost to acquire a customer). High LTV spread across many users means publishers can afford to spend a hefty chunk in UA (user acquisition), with derivative high organic traffic resulting in decreasing CAC. Mm yes, the rich get richer indeed.
This doesn’t mean smaller publishers have been Mortal Kombat fatality-d for good. It just means indie games need to place more emphasis on the quality of their UA campaigns. Understanding what makes their target audience tick is imperative and can create effective campaigns that compete with larger publishers (whose big budgets allow for them to target broad segments) in a highly profitable, yet saturated, market.
Calculating LTV
LTV can either be a simple or highly complicated metric depending on how its measured and what data is available. Historic LTV is simple. How much money does a user generate in a given day (ARPDAU) and what is their lifespan (i.e., how long, in days, is the time between installing and starting to play and ceasing participation)? Multiply those suckers together. Easy math. Taking the averages of these metrics paints a picture of an average LTV for a consumer (duh). Mobile games can get fancier with more data than the individual or average LTV. Indie devs especially want to get into the nitty gritty and understand the LTV of certain cohorts and segments. Again, this segmentation is easy or difficult depending on how ya slice it. A time-based cohort is easy to measure. This can be a specific day (i.e., June 9th) or based on weekly, monthly, or quarterly time windows.
Segmenting users more deeply requires, you guessed it, lots more specific data. Segmenting users based on behavior, demographics, psychographics, game progression, churn risk, and acquisition source requires appropriate data. Problem is, that data often isn’t readily available. If you’ve heard it once, you’ve heard it a million times (a few hundred thousand of those times from us), we’re in a privacy revolution. Consumers are more wary of sharing or exchanging data. Laws and regulations coupled with updated policies and privacy initiatives such as iOS 14.5’s ATT (App Tracking Transparency) and Google’s third-party cookie phaseout have made data harder to come by than ever.
This isn’t tremendous news for indie games. If you want to compete with the Tencents and Activisions of the world, or any publisher with a bigger budget, accurate user data is the key to setting yourself up for success.
So, how in the heck do publishers and developers get a hold of all this data in this so-called privacy era? Enter our beautiful friend, zero-party data. Hi, ZPD! Lovely to see you again.
What is Zero-Party Data?
Zero-party data is about to hit the world with the same veracity, response, and trajectory as boy bands did back in the late 90s, only with much longer staying power. Or, at least, we think things will go down something like that. Privacy is en vogue, making data scarcer and more valuable than ever. Many marketers have been freaking out over Apple and Google throwing a wrench into long-established and proven methods of collecting user data and using it to run, measure, and optimize advertisements.
Zero-party data is a modern-day solution for data collection ailments. Why? Because it’s data given willingly to businesses. Data straight from the source, just as the internet gods intended.
The catch here is that not only is it given willingly, it is often given with the expectation of receiving something in return. See, folks these days aren’t totally against the idea of sharing their data. What they are against is having their data taken from them and misused by reckless businesses.
Our solution to this is our patented (well, not really patented) zero-party data licensing and monetization software. This allows businesses to deploy custom offers to users including discounts and coupons, loyalty points, access to exclusive features, cash back, and more in exchange for users sharing zero-party data. This can be anything from name and email address to in-app behavior, access to IDFA, and interests and preferences We’ve already written generally about increasing ATT opt-in in mobile games, and more specifically about improving eCPM in mobile games.
Let’s dive into zero-party data’s role in creating accurate LTV segments, strengthening UA efforts, decreasing CAC, and increasing LTV overall and among segments.
A Dire Need for Data - CAC, LTV, & UA
Accurate user data plays a role in nearly every aspect of mobile game monetization. When it comes to increasing overall LTV, UA efforts need specificity. LTVs for specific segments allow for targeted campaign optimization and a first step into competition with the Rick-Ross-blowing-money-fast crowd of established publishers. It’s worth mentioning that they can also segment and target with hyper-specificity, but when you’ve got an ass-ton of money you can afford to go broad. For indie games, going too broad is something they quite literally cannot afford.
User data is that in-game power-up indie games are looking for. To level the playing field and maximize their chances for success, indie games must rely on data-driven strategies to optimize UA campaigns, increase LTV, and decrease CAC. Good data allows publishers and developers to not only calculate more precise segments but also to learn which of these segments is most valuable. Equipped with this information, publishers can tailor marketing efforts, prioritize acquisition efforts, and allocate resources effectively and appropriately.
Regarding acquisition, focus can be placed on acquiring the users most likely to generate significant revenue. When it comes to retention and monetization, accurate data leads to a deeper understanding of not only those who generate the most revenue but those who do not, and those who could generate more.
Devs and publishers get better insight into what makes users churn, can identify what ads resonate and when, optimize pricing models, increase personalization and player engagement opportunities, and much more.
Starting at Segmentation
Zero-party data, by nature, offers insights into who the user really is, as told by the user. The methods for collecting said data are numerous, including through the permissions granted by the TIKI SDK, surveys and feedback forms. This combined with the first-party data mobile games are already collecting (and the third-party data, while it’s still readily available) provide statistical resources for breaking your user base down into distinct categories.
The segments are based on similar characteristics or behaviors. As mentioned earlier, this can be as simple as time window cohorts or complex like how they interact with the game, choices they make, which campaign (if any) led to entering the funnel, and more. These segments can be combined in a multitude of ways to create even more precise groups.
Say you’re an indie publisher with a game, or a catalog of games. With the addition of zero-party data to your arsenal, you may create or improve upon a segment called “Competitive Multiplayer Freaks/Spenders.” I sort of made this up, I don’t think anyone would really call anyone that, but what do I know.
Anyway, this becomes a prime segment to target because these folks are willing to spend more money to remain competitive in multiplayer modes and climb leaderboards against other humans. An assortment of surveys, onboarding questionnaires and walk-throughs, preference and options menus, and in-game activity and behavior can contribute to fleshing out personas for this segment. You know what makes them tick, now for execution.
Improving User Acquisition Strategies, Lowering CAC
You’ve got your segments, and Multiplayer Competitive Freaks are your main target. You don’t have money to waste, so you want to lock right in. With the insights gleaned from zero-party data in your arsenal, messaging and tone can be nailed down in advertising campaigns.
The gamers love the thrill of competition and getting a high score and seeing their name rocket past other gamers. Messaging can be used to target these exact sentiments. Imagery can be used to give a prospective user a taste of why your game rocks, showcasing gameplay from the active segment’s favorite modes or levels. Influencer campaigns or partnership deals can be orchestrated with influencers and brands who are known for competitive multiplayer activity.
Furthermore, you can update your presence in the app store with more accurate tags so your target segment can also find you. The key here is when you’re a smaller publisher, you’ve got limited arrows in the quiver, so to speak. Knowing your target, their behaviors, where you might find them, what might attract them, and then when you get a chance to bring them over to your side, delivering the right message—these are all vital elements to ensuring UA strategies are calculated. Zero-party data helps with all of that. I realize much of what I just said sounds like hunting a deer. It’s not my fault, I didn’t invent marketing terminology.
But picture this: imagine you live in an alternate land where deer enjoy being shot with arrows.
After you shoot the deer, they’re like “Oh shit, thanks big dawg. My name’s Daryl. I like to walk around these woods a lot. Usually, I am chilling near the waterfall. I like the smell of napalm in the morning and rhubarb pie. All of my friends love rhubarb pie, we have our own little rhubarb pie club. I love competitively climbing leaderboards and dominating strangers I do not know in battle royale mode. I like the bazooka best, but I’d use the heat-seeking rocket launcher more if it wasn’t so dang expensive,” and then after you give him a slice of pepperoni, because in this world that is one way to delight deer after you shoot them with an arrow. That’s basically what zero-party data can do for you, except not with deer, but with your games. I hope this metaphor is crystal clear.
Naturally, this level of precision will decrease CAC. Instead of spreading your budget across a wide range of campaigns that you’re not sure will convert or attract the right users, you can dedicate resources to a few really sure bets. If you know what makes your deer---er, users---tick, you can create optimal campaigns, and lower CAC will follow.
Increasing Retention and LTV of Daily Active Users, and Turning Users into the Daily-Active Kind
I’m not going to go into a tremendous amount of depth here, because lots of the same information above is applicable here. If you’re a publisher, you know acquisition and retention are both vital. The same types of insights gleaned with the help of zero-party data that fuel acquisition can fuel retention.
If you know what a user likes and how they behave, you can deploy numerous forward-thinking initiatives, from improving your ad inventory to personalizing the gaming experience with new perks, items and levels that your users will love.
Nail down the “who,” and the “what,” “when,” “why,” and “how” become clear.
Zero-party data can delight current power users and create new ones. Transparency about the data collection process and offering the user something in return brings more trust, and more positive word of mouth (PWOM). These gamers are more likely to make purchases, and likely to have longer lifespans and generate higher ARDPAU, meaning LTV goes on the rise.
Learn more from the users you’ve acquired and retained, and use that information to acquire and retain more. It’s a beautiful cycle, ain’t it?
A Note on Privacy: Statistically, Most Publishers are Breaking the Law
It is entirely possible a game publisher may have read this and scoffed at the idea of implementing zero-party data. Well, I’ve seen the stats, and most publishers are collecting data without consent, which is, more often than not, very against the law.
TIKI’s SDK not only offers a way to collect data and reward users. Arguably of more importance is its ability to create consent management. Usercentrics analyzed 269 popular mobile games and found that 90% of them did not offer a consent choice to users. Yikes.
Usercentrics says a good chunk of these publishers likely are failing to offer consent choice in spite of the law, but rather because they don’t know how to deploy a consent management system. Luckily for publishers, the people-behind-the-pineapple-logo at TIKI have this base covered as well. With TIKI, you can generate millions of unique immutable data licenses based on consent over numerous types of data, and search, index, and use them with ease.
It's not just future-proofing your data collection process, but it’s also giving users what they truly want. 80% of respondents say they’re more likely to purchase from companies they believe protect clients’ personal data (Cisco). The UK Data and Marketing Association observed a 100% increase in a user’s willingness to share data if they trust a brand.
As good ol’ Bobby Dylan once said, the times are a-changin’. Privacy initiatives are changing along with consumer sentiment. We know it sucks when your metrics tank because you can’t do things the way you used to, but we see it as an opportunity to solidify your brand as a beacon of trust. With trust comes loyalty, and with loyalty comes increases to that vital LTV. Delicious. Now go out there and attract and delight those deer. If you read that sentence out of context, I apologize. Just scroll up a little.
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