[Originally posted on VentureBeat September 27th 2012]
Mobile game developers are some of the most creative people on the planet. In just a few inches of screen space, they create immersive and fun games that can compete in a constantly expanding market. However, making an awesome game isn’t always enough to keep a roof over your head. How mobile games make money is often an afterthought for a lot of developers although it’s arguably the most important aspect of a game.
Monetization is something developers should consider from square one. From my experience the most common mistakes in mobile monetization can be grouped into four categories:
- Not planning monetization into a game prior to launch
- Not using analytics to measure performance
- Not having a marketing/advertising plan
- Not making your offer wall easily accessible
Addressing each of these key areas is a must for any serious mobile app developer.
Planning monetization into a game prior to launch sounds like common sense, but the amount of developers who don’t consider this before launch is surprising. Apsalar reports that “64% of users who have 6+ game apps installed have made an in-app purchase,” suggesting that planning for in-app purchases from the ground up is a must.
The main reason for pre-planning monetization is that a new game will generally get an influx of new users through various types of marketing. Why not monetize them from day one? The alternative is to grow your user base by getting a mass of users engaged in your game and then use metrics to optimize your monetization model. Ether way, planning a monetization model into your game during the development stage is imperative.
To keep your game competitive, you should track what your users are doing practically on an hourly basis. As such, analytics are a powerful tool for developers. Having a concrete understanding of how well your mobile app performs is critical to optimize revenue, to reach a more targeted audience, and to help control the budget more effectively.
Monetization is measured in average revenue per daily active user and the lifetime value of a user. However, monetization is most influenced by your design – did you include integrated interfaces for in-app purchases/offers? Did you explain what an in-app purchase/upgrade does? Asking these types of questions allows you to upsell at the right time and increase conversion rates.
Planning for marketing and advertising is also critical. App stores are now the new frontier for search engine optimization with the rise of apps. With over 742,000 apps in the Apple App Store alone, and 675,000+ on Android, getting your app noticed amongst all the clutter is the true challenge today.
Creating organic download traffic is difficult, as the lion’s share of organic downloads usually come from being featured in an app store or being at the top of the charts. Selecting important keywords is the first step in App Store Optimization (ASO). There are even services out there to help with this (e.g. MobileDevHQ’s App Store Optimization tool). Another key area in mobile app marketing is push notifications- a powerful tool for reaching your audience with relevant messages. Understanding what traffic is profitable is also a key part in determining success. For example, using pay per install (PPI) advertising over pay per click (PPC) means developers will only be paying for results.
Finally, creating an offer wall that is easy to navigate promotes simplicity- something that goes a long way. Providing a navigable offer wall for your users facilitates an increase in conversion rates, as the end user is able to get exactly what they want in the least complicated way. By the end of 2012, 89 percent of mobile downloads will have cost nothing to the end user, while 95 percent or so will not pay for in-app purchases (Gartner). Providing users who naturally avoid paying for apps with easily accessible, non-intrusive in-app messages or offer walls is an excellent way to increase monetization. I’ve seen first hand how layering apps with alternative revenue sources can increase ARPDAU by as much as 850 percent.
Gartner reports that while app downloads continue to grow, people will buy fewer and fewer apps. As we move towards a freemium-dominated market, the ability to monetize your app successfully determines if you sink or swim in the new school of mobile.