This is a primer, designed with developers in mind who might not otherwise be too familiar with marketing in mobile games, and specifically the changes that have taken place over the last few years.
A Quick History
The mobile gaming industry has been forced to respond to a seismic shift in paid marketing, also known as user acquisition. The shift can't be understated, and companies that previously depended on paid marketing channels are finding out that they need to adapt if they plan to stick around.
Let's rewind a bit. For the past decade or so, mobile game marketing has benefitted from a neat trick of near-perfect attribution within the realm of user acquisition. By virtue of specific mobile device identification numbers for advertising – the identifier for advertisers (IDFA) on iOS and Google advertising identify (GAID) on Android -- it has been possible for mobile game advertisers to track and target specific customers with relevant ads, and to measure their effectiveness.
A company's user acquisition strategy might have involve paying an advertising partner a few dollars per user, with the certainty that those users regularly play mobile games of a particular type, enjoy a particular theme, and typically will spend a certain amount in the game.
A series of calculations could then be performed: if a cohort of 1000 users costs $1000, and 25% of them spend $50 dollars within 4 weeks, then a profit of $250 is seen after 4 weeks. The numbers won't be exactly the same with each cohort, but the trick of perfect attributes means that on average results can be reproduced within a margin.
When monetization becomes predictable, this neat trick becomes a money printing machine – up to a point. When the market segment becomes saturated, the cost of users in that segment goes up, and if nothing changes in the per-user metrics, revenue goes down until it's no longer a viable strategy.
For much of the previous decade, many mobile game companies have been hyper-focused on this user acquisition strategy as their primary driver for revenue. A game studio's whole financial strategy might involve taking a certain type of game with well-known per-user metrics, and reskinning for a new target audience with a lower Cost-Per-Install (CPI), then exploiting the gap in the market while it exists. We've all seen the match-three clones out there, available in any flavour under the sun.
And then, without warning, things changed.
There had been a few small steps towards increased privacy for users, but then very abruptly in 2021 came the abolishment of the specific ids which enabled direct attribution: IDFA and GAID. Privacy concerns have been the touted the reason for the removal, although it's not a stretch to think that perhaps Apple and Google would simply prefer to cut out 3rd party ad networks.
The loss of direct attribution made it significantly harder for developers to target their advertising to specific audiences, leading to a decline in the effectiveness of mobile advertising campaigns and a decrease in advertising revenue – and for studios that rely heavily on in-app purchases, in particular.
There is simply much more variance in how a cohort of paid users will behave, to the point it has become challenging to project the monetization of a cohort with confidence. And when that's not possible, user acquisition becomes a gamble, and less of a prudent choice. Steady sources of revenue start behaving erratically, and a paid marketing strategy might no longer be enough.
If a studio is forced to adapt its marketing strategy, studios that already have traction with other marketing strategies will have a huge advantage. Meanwhile, studios that don't will be forced to either develop new competencies in house, or hire folks who do – which itself can be costly and risky.
What Will Happen in 2023
There is good news for studios who are driven to adapt to changing conditions: direct attribution has never been a thing in traditional consumer packaged goods (CPG) marketing or web marketing, so there are many marketing playbooks available. I suspect we'll see more of a focus in these areas:
- Organic growth – focus on improving the per-user metrics. If there's a game community, put the emphasis on community building and serving the existing player community. By growing a stronger relationship with players, they will become advocates for your game and stick around much longer. This won't replace a paid strategy, but it will be a multiplier on that strategy during a time when the paid strategy is in decline.
- Better video ads and better video ad placement – done correctly, video ads do not need to be cheap or annoying and drive revenue for players who might not monetize otherwise.
- More and more diverse ad partners – similar to an investment strategy, diversification is key. Cast a wide net, monitor, and rebalance frequently.
- Increased platformification – Incentivize players to stay within your studio's portfolio of games. Just because they might be growing our of one game doesn't mean they can't grow in to another game by the same studio. More tie-ins, more cross-promotions and cross-game events. Leveraging familiar and well-performing pillars between games.
Things I don't know enough about yet but might be relevant:
- StoreKit Ad Network (SKAdNetwork), the privacy-safe mobile attribution framework from Apple that is supposed to replace IDFA. Apparently it's possible to get decent results with a mixed conversion model if you can correctly model the missing data for your game. Not sure how successful mobile marketers are with this yet.