Key Metrics for App Monetization, App Retention and User Acquisition

Here are the key metrics any app manager for apps in particular for freemium apps should look at:
Please let me know in case I have forgotten some important metrics

Customer Acquisition
  • CPI = Cost per install  
  • CTR = Click through rates. Can vary from 0.1% to 15% depending on the invasive character of the ad 
  • Conversion rates 
    • Click to install 
    • Install to active user 
    • active user to paid 
  • CAC Customer acquisition costs = sum of direct marketing expenses of all channels 
  • Weighted CAC = In case you are boosting a game from zero to the top charts, you might want to factor in the zero CAC through organic installs.
The mobile gaming space has turned from a blue to a dark red ocean where publishers with big pockets are outspending competitors. In general the best monetizing games will justify a CPI of 70 cents. Not more. General rule of thumb: Don't spend more than 30 cents depending on the marketing channel. Users coming from an offer like Tapjoy usually will have a lousy monetization with unofficial deinstallation rates of ~80%

  • DAU = daily active users 
  • Retention (7days, 30 days) = Logins in a time interval and time usage thereof
Most mobile games level off after a couple months. Look at appannie data and you will be astonished. Mobile social games like Rule the Sky can have a life time of 18months. But this is largely due to 2 updates per month keeping users busy. Big hits like Anipang in the casual space seem to last at least 6months.

  • ARPU = average revenue per user per month
  • ARPPU = average revenue per paying user per month
  • ARPDAU = average revenue per daily active user
  • % paying users (to cumulative users) 
  • ARPDAU / DAU = ratio between average revenues per daily active user and daily active users
  • Life Time (Free and Paid) --> LTV Life Time Value
  • Time from free to paid user t{free --> paid}
  • eCPM = (revenues / total ad impressions) x 1000  --> In case you are in-app ads driven
 What I noticed are definitely some cultural differences as to how steep the balancing between free and pay can go. In Germany, users can turn the best made game launch into a total shitstorm because game balancing quite frankly started to suck after 1h of game play, forcing users to pay more than they would have ever paid for a premium game.

Profitability (Contribution margin 1) metrics
  • DAU x ARPDAU > Costs (--> Target margin)
  • LTV - CAC = Profit 
  • (LTV - CAC) / LTV = ROI 
  • NPV {LTV} Net present value of LTV --> would only make sense if you had a very long LT over two years, so that you would have to discount the cash flows. 
In case you are not having enough budget or inherent virality with the game that the average CAC per user becomes less than the total LTV, you need to control ROI right from start, especially when you have run some initial tests and now want to grow. So when you are able to boost yourself up to the top 10, a direct contribution margin might be lousy but offset by the free installations you get from organic store users.

 If you have more feedback, please add me on my David An Gplus account

Update note: 18March2014
I have found a good article called " Monetization-based Game Design: ARPDAU Contribution" 
http://quarterview.com/?p=228 with a good benchmark data

No comments:

Post a Comment

Let me check your comment first