So the developers of free-to-play games have to be really careful about how they monetize us: push in-app purchases (IAPs) too hard, especially to those players who don’t ever intend to pay, and they’ll come across as pushy. But if they didn’t promote IAP at all they would never be able to sustain their business. It’s a fine balance, and they have to balance advertising revenue just the same way.
Most developers of free-to-play apps understand the importance of getting the freemium equation just right, and they are getting smarter and savvier about implementing IAP promotions and ad-based monetization in the most effective way.
The key is treating each and every player as an individual, according to his or her unique preferences. Once you know what type of persona each player falls into, you can deliver better, more targeted engagement and monetization campaigns.
To help developers understand the most important personas of today’s mobile gamers, we crunched the numbers. We also made some recommendations on how to leverage Tapjoy’s Personalized Monetization Platform to treat these personas to drive the highest lifetime value from each player.
Let’s take a look…
Whales are the top spenders in any game and account for the bulk of its revenue. Our data shows that the top 10% of an app’s spenders drive 70% of its IAP revenue and nearly 60% of its total revenue. They make approximately 7.4 IAP transactions each month, for a median Average Revenue Per Paying User (ARPPU) of $335.
Don’t even bother serving these players advertising offers. Instead, focus on making them aware of valuable, useful or just plain cool virtual items that they’d be interested in buying. If they have a tendency to pay for high-end items, promote those, but they may be just as likely to take part in a currency bundle in order to stretch the value of their dollar.
Dolphins and Minnows
The rest of your spenders can be considered dolphins (mid-level spenders) and minnows (low-level spenders). These players conduct a little less than 2 IAP transactions per month for a median ARPPU of $17.94. They also have a shorter lifespan than whales — 33 days compared to 40.
But since there are many more of them than there are whales, they can still account for a significant chunk of revenue. Currency bundles and IAP promotions (especially for lower-end items) are important when monetizing dolphins and minnows, but don’t forget to mix in reward-based advertising offers as well.
Non-Spending Offer Takers
Ninety-five percent of a freemium app’s users will never spend a dime, which is why it’s so important to get these non-spenders to engage with rewarded advertising offers. These players will complete about 8 offers per month for a monthly Average Revenue Per User (ARPU) of $3.38.
Of course, you still must be careful not to over-serve ad offers to these users and disrupt their experience. Serve rewarded ads during non-intrusive and contextually relevant moments within your app, such as when the app first launches or right after a failed level. This type of contextual relevancy will drive conversion rates way up, and will be viewed as a valuable service you’re providing rather than as a hindrance to gameplay.
Despite your best efforts, chances are that about 91% of your users will never pay for in-app content nor complete any user-initiated ad offer. And although the revenue generated from these users can vary from 0 to about 5% depending on how they’re monetized, most apps will generate only about 0.1% of their revenue from these “passive players.”
But these players are still important, because they contribute to your Daily Active User base and can invite their friends to join them. In order to engage these users most effectively, send engagement messages during contextual moments to make sure they stay active and motivated in your game.
Any player is at risk of churning if their last session was significantly longer ago than the average length of time between their normal sessions. The median length of time between app sessions for most players is 7 hours and 27 minutes. Obviously, the longer it has been since their last open, the greater their chances of churning: there’s an 11% likelihood of churn if they haven’t opened the app in 1 day and a 97% likelihood if it’s been 30 days.
The best way to re-engage any risk-of-churn player is to send them a push notification offering a good reason or some type of reward for returning to the app and continuing to play.
Players might take a little time when they first start playing your game before they clearly establish themselves as belonging to a particular persona. Spenders don’t make their first in-app payment for an average of 16.3 days, while offer-takers wait an average of 3.7 days before completing their first ad offer.
Be patient with these new players. Don’t inundate them with too many IAP promotions or ad offers too early on. Let them establish their gameplay before pressing them too hard one way or the other, while slowly easing them towards monetization. During their initial gameplay, it’s best to serve them with engagement messages designed to help them get the most from their experience.
Tapjoy’s Personalized Monetization Platform Manages It All
When freemium game developers segment their players properly and treat each player according to his or her preferred style of play, the experience is both rewarding for the player and lucrative for the developer. Tapjoy’s Personalized Monetization Platform helps apps developers understand player behaviors, segment users accordingly, and deliver targeted, contextually relevant engagement, retention and monetization campaigns that cater to all sorts of player personas.
To learn more about our analytics, marketing automation and ad-based monetization solutions, visit https://review.tapjoy.kiosk.tm/developers/.[:]