Struggling to make your mobile game profitable? You probably need to rethink your monetization strategy. We’re here to help with that. In this article, we’ll go over the most important mobile game monetization KPIs as well as tips on how to reach them.
Let’s dive right in!
KPI #1: Day 7 Retention Above 10%
User retention has a direct impact on monetization and vice versa – that’s what makes it one of the most important mobile game monetization KPIs.
If a mobile game retains a significant amount of users after day 7 and beyond, it makes monetization easier. Data from DeltaDNA shows that good user retention has a positive impact on ARPDAU.
On the other hand, if monetization is done poorly, it can negatively affect user retention. Users who feel pressured into purchases or are constantly nagged by ads are highly likely to abandon a game.
Having 10% day 7 retention or above is a good KPI that developers should aim for in order to successfully monetize their mobile game.
Here’s how to accomplish that.
DO: Integrate In-App Purchases Seamlessly
The key to good user retention, as well as monetization, is to keep users engaged. To accomplish that, developers need to ensure a good user experience.
When you add monetization to the mix, that can get quite tricky. However, it is possible.
For starters, in-app purchases should never be obtrusive or misleading. This mechanic needs to be integrated smoothly. Furthermore, there needs to be a clear separation between paid and free content.
If a player is deceived and tricked into making a purchase, you can count on them getting annoyed or even deleting the game.
Developers should lead players to content naturally and be strategic about offers.
The best way to go about it is to implement monetization mechanics while you’re developing your game – that will make the integration seamless.
DON’T: Be Aggressive with Offers
When reading monetization tips, you have probably come across advice to contact players with offers. That’s done through messages, pop-ups, and push notifications.
That’s good advice.
However, it needs to be done right.
The last thing players want is to be constantly bombarded with countless offers. It’s one of the biggest in-app purchase mistakes. Not only will they definitely not purchase anything, but they might abandon the game. That strategy inevitably leads to high churn rates.
Additionally, even if they don’t stop playing, they will get into a habit of ignoring offers without even considering them.
KPI #2: Day 7 Payer Fraction Above 10%
Another important mobile game monetization KPI developers should aim for is to have day 7 payer fraction above 10%. In other words, players should be introduced to an IAP offer right from the start. The goal is to encourage purchasing early in their journey.
Here’s how to do it right.
DO: Improve the Onboarding Process and Present IAP Offers
To achieve this KPI, the onboarding process should include an introduction to in-app purchases. In other words, create a tutorial or a tour of the store and its mechanics.
Make sure the store is simple, engaging, enticing, as well as easy to use and access.
Once the players are introduced to in-app purchases during the onboarding process, they should receive a good offer. At this time, things like starter bundles that bring a lot of value at a low price are very effective.
They create a sense of urgency and get players into making their first purchase.
DON’T: Push Too Hard to Sell Early On
While it’s important to make that first sale early in the player’s journey, it should not come at all costs. It’s more important for players to have a positive first experience with the game and its in-app purchases.
It’s a tricky balance to achieve.
Developers need to make sure their messaging is not pushy but instead builds a relationship with the player. That way, offers won’t seem as aggressive and churn will be avoided.
For more tips, check out our guide on monetization messaging.
KPI #3: Minimum IAP Price Point Above $2
Many developers fall into the trap of thinking they need to lower IAP prices as much as possible to get the most purchases. However, that’s not true and low prices can have the opposite effect.
As the graph from DeltaDNA shows, a minimum price point below $2 has a negative impact on ARPDAU and it cheapens the game.
When the minimum price point is above $2, ARPDAU goes up and is in the 10-20 cents range. The same goes for prices of $4 and more. This is the sweet spot for getting a good average revenue per paying user.
However, these price points might seem like a lot to many users and, of course, you need to offer something of value in order to justify a higher price.
Here are some tips on how to reach those price points without scaring users away.
DO: Offer Bundles and Better Deals for Expensive Items
In order to successfully monetize, the more expensive items should convert better than cheaper ones. Players should always be encouraged to spend more.
However, as I mentioned, developers need to ensure that players get great deals for those expensive items. Use bundles and currency packs to create great value for money. This is a good incentive for users to spend more and purchase expensive items.
Another way to get players to spend more on an item is to offer exclusive and rare items. Cosmetic items like skins and accessories, as well as unique avatars, are all great offers. For players, such items are primarily a status symbol, which makes them splash out.
DON’T: Make Your Items Too Cheap
As we’ve established, many developers think having cheap items (below $2) will help their monetization efforts. Data shows that the minimum price point should be above $2.
Another mistake is offering better value for money with cheaper items. But cheap should never be equated with value. Expensive items should always be more valuable.
KPI #4: 3 Purchases Per Paying User or More
The percentage of users that make a purchase is usually small in free-to-play games. That’s normal.
However, developers should focus on getting paying users to spend more and make repeated purchases.
The sweet spot for achieving a good ARPDAU (10-20 cents per user) is 3 purchases per paying user or more.
Read some tips on how to achieve that below.
DO: Make IAP a Part of Core Gameplay
Developers shouldn’t wait too long to introduce in-app purchases. In fact, they should be presented to users right away. Otherwise, players will get into the habit of playing without having IAP in mind.
Most importantly, in-app purchases need to be integrated into core gameplay seamlessly. Developers need to be strategic about the IAP system and as well as communication about offers and opportunities.
For this reason, they should pay special attention to monetization messaging. This refers to all of the ways developers address players. If you want your game to have effective monetization messaging, you should:
- segment players
- follow their in-game progress
- make them feel special
DON’T: Send Generic Offers
This is a common mistake a lot of developers make – sending the same offers to all users.
This is 100% futile.
Players have different playing styles, behavior, and engagement. They cannot be put in the same group. An offer can be perfect for one player and totally irrelevant to the other. For this reason, one of the biggest mistakes you can do is not to segment your players.
What happens when players receive generic offers that are not personalized in any way is that they become uninterested in IAP and irritated. That leads to a decrease in ARPDAU and quite possibly churn.
KPI #5: Have at Least 5% of Spenders Become Whales
Mobile game whales are very rare, but they represent a group of users who bring developers the most revenue. Most commonly, users with $100 or more lifetime spend are considered to be whales. That’s what makes them so valuable.
Now, the goal is to have at least 5% of spenders become whales.
Since whales are big spenders, even a small increase in that percentage can significantly improve your ARPDAU. That’s what makes this KPI so important.
Here’s some advice on what to do and what not to do in order to achieve it.
DO: Play the Long Game
The strategy to get users to spend more and become whales is not a quick one. It requires that you nurture players and increase their engagement over time.
Research from DeltaDNA shows that whales are not spending $100 on one purchase. The typical amount they spend per purchase is approximately $20.
Furthermore, the purchasing experience needs to be extremely rewarding for players so that they’re incentivized to reach that $100+ in lifetime spend.
That means good/relevant offers and great value for money.
It also helps to understand the motivations behind big spenders.
Some are motivated by winning and beating other players. Those types of whales want to have the best weapons, items, and gear to maximize their chance of winning. For others, it’s about showing off.
When playing with friends, many whales want to get the best cosmetic items and signal their status. Others simply get addicted and emotionally invested in a game and its characters, which makes them spend a lot of money to get the full experience.
DON’T: Push for Extremely High Individual Payments
As it was mentioned, whales’ individual payments are not as high as you might think. More than half of them have never spent more than $50 on one purchase.
Therefore, setting extremely high price points for certain items or bundles is pointless.
The goal of developers should not be to entice a player to make one big purchase, but rather encourage them to spend regularly. That’s how you get to 100$+ lifetime spend.
KPI #6: More Than 30% DAU Who Watch Ads
When it comes to in-game ads as a monetization model, reaching 30% of unique ad viewers is another one of the key mobile game monetization KPIs.
Here’s how you achieve that.
DO: Integrate Ads in a Smart Way
Just like in-app purchases, rewarded ads should be introduced relatively early in the player’s journey. It can be done during the onboarding process, through a tutorial or task. The key is to show players that there’s an incentive to watch ads, as they get a reward for it.
This is especially important for games with lower retention rates and low player LTVs. For such games, it’s a priority to monetize as many players as early as possible. After all, they probably won’t stick for a long time.
On the other hand, games with higher LTVs and better retention rates can afford to integrate these placements later in the game. Not too late, of course. You can wait until players fully understand the game, and where they start needing assistance. If your goal is to monetize engaged non-paying players, then this is the way to go.
When it comes to interstitials, they shouldn’t be shown in the middle of gameplay, but rather during transitions, after a user has completed a level.
DON’T: Show Ads Randomly
A common mistake developers make is that they place ads at random places inside the game, e.g., sub-menus, the store, etc.
Many players won’t even explore those parts of the user interface.
Rewarded ads need to be placed strategically and players should be aware of them from the very start. These are the ads the largest percentage of players will interact with since they offer something in return.
For interstitial ads, the biggest mistake is showing them too often and in a way that kills game flow. Show them during breaks. Yet, it’s recommended not to show them between every gameplay break.
That’s, of course, tricky because your ad revenue depends on the number of ads. You might think that adjusting gameplay so that it has more transitions and breaks is a good workaround.
However, that negatively impacts user retention, which makes it a bad strategy.
According to the Facebook Gaming survey, a large majority of mobile game players prefer less frequent ad breaks with longer ads rather than frequent short ads.
So if you want to make sure the user experience is good, this is the strategy you should employ.
Finally, remember that the only way to find the ideal ad frequency is to regularly test it.
KPI #7: Rewarded Video Ad Value Above $0.05
Rewarded video ad value also has a big impact on ad monetization. Keeping it above $0.05 is also among good mobile game monetization KPIs.
DO: Give Out Valuable Rewards
The reason why rewarded videos work is the exchange system – players watch an ad and get something in return.
However, the value of those rewards needs to be fairly high. That’s often an issue because a typical impression is worth about 2 or 3 cents and the goal is to have an ad value of 5.
You can even segment players and give them personalized rewards.
For example, you can give occasional players higher-value rewards. This way, they might be more tempted to play the game more frequently.
Loyal players, on the other hand, can receive lower-value rewards. This is effective if your game also includes IAPs. The thing is, these users are more likely to purchase something from the game, and you don’t want to cannibalize that with rewards from your ads.
Of course, you should keep all the rewards valuable enough for users to even decide to watch the ads.
DON’T: Reduce the Effectiveness of Rewarded Ads
When rewarded video ad value is below 5 cents, its effectiveness is reduced. In the long run, it’s better not to shy away from giving out generous awards and limit the number of ads shown. It actually has a positive effect on mobile game monetization.
For example, you can limit the number of rewarded ads players can watch in a day to five or fewer.
KPI #8: Competitor Ads
Competitor ads are tricky – they bring developers ad revenue, but they can also send players to competitors.
Here’s some advice when showing competitor ads.
DO: Be Strategic About Showing Competitor Ads
In order to avoid a negative impact on user retention, you should show competitor ads less frequently than all other ads. Furthermore, they should be placed at the end of user sessions.
Additionally, it’s a smart idea to show competitor ads to low-value cohorts.
DON’T: Show Competitor Ads That Are Irrelevant to Your Users
As with any other type of ads, avoid showing irrelevant competitor ads. First of all, that leads to low ad revenue. However, it also irritates players, which can have many adverse consequences, the worst of them being high churn rates.
Mobile Game Monetization KPIs: Final Thoughts
With mobile game monetization, the goal is making a game profitable while keeping players satisfied and engaged.
However, the line between profit and alienating players is very thin and developers have a tough job of balancing it all out.
But if you follow the monetization basics we covered in this article, you should be moving in the right direction.
Just make sure you track these important mobile game monetization KPIs and let them guide your decisions.
For more help on mobile game monetization, contact us or book a call!