The document discusses how mobile games make money through three pillars: user acquisition, engagement, and monetization. It describes the process of acquiring users through ads and organic discovery. Key metrics for engagement include retention, session frequency and length, and virality/K-factor. Games can monetize through premium, in-app purchases, or ads models. Key monetization metrics are conversion rate, ARPU, and LTV, which is predicted using the monetization or lifetime approach based on past user revenue or retention over time. The document provides an overview of analytics used to optimize the user funnel and maximize revenue.

1. How We Make Money
a.k.a. Introduction to Mobile Gaming Analytics

2. 3 PILLARS OF MGA
 User Acquisition
 Engagement
 Monetization
Basically a funnel, what we want is to get most of our users to
Monetization. Also, these 3 pillars happen to cover the whole
lifetime of a user.

3. USER ACQUISITION
 Impression
 Click
 Install
Phases of user acquisition

4. UA FUNNEL

5. IMPRESSION
 Advertiser: The party that wants to display Ads.
 Publisher: Sells the place Advertisers displays Ads
 3rd parties: Mediators, Audience Networks…
 When you see an ad on web/mobile (what is an Impression), it is
always an auction. Advertisers bid for Publishers ad space.

6. IMPRESSION ADS TYPE

7. IMPRESSION (BIDDING)
 Every ad space holds an auction. (Real-Time Bidding)
 Value differentiates depending on the targeting.
∙ Females might be more valuable than males.
∙ Online Spenders might be (are) more valuable.
 Bidding might be on
∙ Impression (CPM: Cost-per-mille (1k impressions))
∙ Click (CPC: Cost-per-click) (Most Common)
∙ Install (CPI/CPA: Cost-per-install)

8. IMPRESSION (RTB)

9. CLICK
CTR: Click through rate. Once we win an auction, our ad is displayed
to the user, and depending on the ad quality and engagement, a
portion of them will click on the ad.
(Remember the lifetime funnel, every step, we lose a portion of
potentially converting users. Thus, losing money.)
But depends heavily on the content, placement, incentives.

10. INSTALL
 Clicks bring users to our Platform Store Page.
(App Store, Play Store etc.)
 You can always add more steps, as a landing page between store
and click, that is almost never a good idea.
 A portion of users landing on our store page convert to Application
Installs. (CR: Conversion Rate)

11. INSTALL (CR)
 CR depends heavily on the outlook of your app.
∙ App Ratings
∙ Install Count
∙ Reviews
∙ Store Images
∙ Video
∙ Description
∙ …

12. ORGANICS
 Users you acquire without paying.
 Might be acquired through various channels. All of which are hard
to track and measure.
∙ Platform features (Think App Store Home Page Banner)
∙ Word of mouth, friend referrals
∙ Store listings
∙ Social features of the app (Request lives via FB, etc.)
 Depends heavily on visibility on stores.

13. USER ACQUISITION
 Once a person is through the UA Funnel, and installs the app,
he/she becomes our “User”. (Might also be referred as “Install” in
some metrics.)
 Becoming a user is somehow important since it implies the intent to
become a converting user.
 In “Premium” monetization model, that is especially important since
the user IS a converting user as of install. We will talk about that
more later.
 The most important metric is: Effective Cost per Install, that is Cost
per install when you include both organics and inorganics. We will
revisit this in Virality.

14. ENGAGEMENT
 Measuring how much players like our game.
 Do they like it enough to make a payment? How much?
 Basically, every time a user plays the game, you flip a coin.
(Imagine a pretty low (< 1%) chance of Heads) If the coin is heads,
you earn money. So the more your users play, the more you earn.

15. ENGAGEMENT KPIs
 Basic KPI(Key Performance Indicator)’s for games:
∙ Retention
∙ Session Frequency
∙ Session Length
∙ K-Factor / Virality
∙ Active Users, Stickiness

16. RETENTION
 The single most important metric to track.
 Return rate
 Affects the user lifetime heavily. (Remember the coin toss, more
chance to convert the user.)
 How to calculate?
 If you get N users daily.
Tomorrow you will have X = (Day1 Retention) * N. Giving you an
active user count of N + X. So, retention decides if your game will
scale or not.

17. RETENTION

18. SESSION KPIs
 Still in the coin toss analogy, think what would happen if you get to
flip the coin 2x more same day? That is what session frequency
does.
 Session length gives you a broad view on how much can you hold
a user’s attention. The more the user is engaged, the more they will
play, the more you get to monetize.
 Also, think of 1010!. As the session length gets longer, player plays
more turns, thus gets to see more ads, which means more revenue.

19. K-FACTOR / VIRALITY
 Virality = Total Users Acquired / Paid Users Acquired
 Getting higher in the listings help a lot.
 Getting featured helps a lot more!
 However, word-of-mouth is still the most important one, since it
causes exponential growth. (See next slide)
 Remember eCPI, Virality is the quotient in the equation. Making it
an important metric in LTV equation, in other words, it’s a deciding
factor whether your game is ROI positive.
eCPI = CPI / Virality

20. K-FACTOR / VIRALITY

21. ACTIVE USERS
 DAU: Daily Active Users, how many players play your game on a
given day.
 MAU: Monthly Active Users, how many players play your game on a
given month.
 Stickiness = DAU / MAU. Think of Facebook, you use it every day,
stickiness = 1.
 Active users means the scale you earn money. Revenue per active
user does not really fluctuate throughout the lifetime of the game,
(unless you make create a difference, bettermonetization?) so
basically if you know what your DAU will be tomorrow, you can
predict your revenue. (Pitfall: ARPDAU fluctuates through the
lifetime of a user!)

22. ENGAGEMENT
You can see how each of these metrics are closely knit together, and
each one of them has an effect on the others.
The higher your retention is, the easier you can increase
your DAU.
The higher your K-Factor is, the lower your eCPI.

23. MONETIZATION
 Monetization might be a little more complicated than that coin toss
analogy. (Weirdly enough, it is still surprisingly relevant.)
 We will talk about
∙ Monetization Models
- Premium
- In-App
- Ads
∙ Monetization KPIs
∙ LTV & LTV Calculation Methods

24. MONETIZATION MODELS
 Premium: Upfront payment (PC games)
 In-App: Free to play, lets users buy additional content, premium
currency, lives boosters etc. (Railroad Gangs, Clash of Clans)
 Ads: Users are presented with ads throughout gameplay. (1010!,
Flappy Bird)
 There exists mixed models: Watch a video to get life or display an
ad where the game already has life (Trivia Crack)

25. PREMIUM
 Pay to Play
 PC Gaming industry
 Since your main goal is to get users to buy your game, heavy on
the marketing side and visibility.
 Pitfall: User experience and engagement seems irrelevant, since
the payment is upfront. Virality still a quotient in the equation, cuts
the cost to get a user to buy your game.
 You will always have friction (upfront payment) getting people to
install the game.
 Every user is a paying user! 100% Conversion Rate!

26. IN-APP
 Free to Play
 Pretty common in mobile world, getting into PC’s too.
(I bet you’ve heard League of Legends)
 User experience and engagement is extremely important, you
have to get users to like your game enough that they buy virtual
goods.
 You have to understand the motives that get users to buy lives,
skins, castles, premium currency, whatever it is you sell. Some hints:
Showing-off, To Relieve Pain, Competition, Content…

27. ADS
 Free to Play
 Only works in masses, requires casual gameplay to reach more
audience. (Low ARPU, ARPDAU)
 Mass requirement dictate gameplay and art style.
 Works best with addictive, repetitive games. (1010!, Flappy Bird,
Crossy Road)
 Short game sessions (turn length), long user sessions for interstitials.
(Again: 1010!, Flappy Bird)
 Every user is a paying user! 100% Conversion Rate!
 How much you make heavily depends on 3rd parties, thus,
unstable.

28.  Every model has its kinks, it’s always worse than your most
conservative predictions, that’s why you need Analytics, BI.
 Each model needs focus on different metrics.
 Each model works differently on different audiences.
(Core-gamer audiences might favor premium, mobile mid-core
audiences in-app)
 Retention is ALWAYS the king.
MONETIZATION MODELS RECAP

29. MONETIZATION KPIs
 Conversion Rate
 ARPU
 ARPPU
 ARPDAU

30. CONVERSION RATE
 What proportion of your users convert to Paying Users.
 Remember the funnel? This is where you want all your users to end
up.
 “A paying user” is just the tip of the iceberg. How much do they pay?
How much do they pay daily? How much to they pay through their
lifetime? Can you make it more?
 UX is a key factor.
 It is usually pretty low!
 The important thing is, WHO converts? Who is your paying audience =
Who should you pay to get into your game.

31. ARPU, ARPPU, ARPDAU
 ARPU: Average Revenue Per User. How much money you make from
a user that installs your game.
∙ ARPU = Total Revenue / Total Installs over a given period.
 ARPPU: Average Revenue Per Paying User. How much money you
make from a paying/converted user.
∙ ARPPU = Total Revenue / Paying User Count
 ARPDAU: Average Revenue Per Daily Active User. How much money
you make from an active user on a single day.
∙ ARPDAU = Daily Revenue / Daily Active User
 Still, converting a user is the first step, these metrics tell how good you
are at monetizing a single user.
 All monetization metrics are affected by engagement metrics.

32. LTV
 Basic definition:
∙ LTV = (Total Revenue – Acquisition Costs) / Total Users
 Positive LTV = Positive ROI = Profitable Game.
 You cannot afford to market your game for months until someone
tells you what your LTV is!
 It is not uncommon for an engaged user to keep playing your
game for MONTHS, and you have to know how much he/she will
have paid at the end of his/her lifetime. And, usually in the first 1-2
weeks of launch.
 Sadly, hardest metric to track.

33. LTV
 Nearly all the time, predicted.
 2 ways to predict.
∙ Monetization Approach
∙ Lifetime Approach

34. LTV PREDICTION (MONETIZATION)

35. LTV PREDICTION (MONETIZATION)
 The graph is total revenue generated from a user over time.
 If you fit a power function to the known portion of the curve, you
might predict the total amount you will receive.

36. LTV PREDICTION (LIFETIME)

37.  The graph is user retention over time.
 The integral under the curve is the lifetime of a user!
 You know how much you make from a single user on a single day
(ARPDAU). If you predict the total lifetime of a user (the rest of the
curve), you can predict the LTV value!
LTV PREDICTION (LIFETIME)

38. Questions?
remzi@gram.gs
Remzi Senel
Gram Games, 2015