We at Initial Capital work with many game companies, ranging from stealth mode yet-to-launch companies to global stars like Supercell. A common theme across all is that user acquisition costs are rising and “we need to figure out brand marketing at some point.” Most mobile games and apps companies are rightly focused on performance based user acquisition (UA) through a Life-time Value (LTV) and Cost-Per-Install (CPI) arbitrage and have a hard time wrapping their heads around how to think about brand oriented marketing in that context. However, as the market matures, getting to a more comprehensive model of marketing is critical for success. As mentioned in my previous post and my keynote at GMIC – I believe this to be a key competitive differentiator for aspiring winners in 2014.
Some background on brand in mobile / apps
John Riccitiello, former EA CEO, and a strong product marketing thinker and investor gave a great talk on the subject of brand marketing at the recent Gaming Insiders Summit – writeup here. His excellent insights are sometimes hard to tie back to a quantitative model of user acquisition and hence get bounced around more quant marketing departments. A good primer on reconciling creative and performance in marketing by Matt Kellie of Supercell is here. But even he doesn’t quite touch on brand.
I think about this a lot and my take on reconciling the subjects based on my cumulative learnings from Glu, Playfish, LOVEFiLM, EA as well as observing Supercell and other portfolio companies below. At EA in particular as EVP Digital including all central marketing I got to work with a really fun mix of super talented folks across both ends of the creative vs performance based spectrum in particular, and it was fun helping bring all elements together into one team and get to one approach.
Three important health warnings :
- Marketing is fundamentally an art as well as a science and the best outcomes will come from creatively minded people respecting the quant wonks and vice versa. We should try to proxy performance with metrics wherever possible but even the most quant minded folks need to acknowledge that not everything is measurable and we need to live with trusting creative instinct. Much like with making games, figuring out the brand-end of app marketing is all about star creative talent more than any formula. Executed correctly metrics will be a great guide for creative – but only that – not a formula.
- The lowest hanging fruit in app marketing will always be getting featured by the app stores (Apple / Google / Amazon) and a series of smart tests of spending mix of UA spend across Facebook, performance based ad networks like Chartboost and video based networks like Everyplay and AdColony. Broader brand marketing will be an important second step optimisation once you have product traction and your main task becomes fighting diminishing returns. I would not start with it – only keep it in the back of my mind as something I need to get to to maximise the potential of the title once the low hanging fruit is exhausted.
- Nothing I’m about to say should take precedence over making a great product. In F2P – games as a service in particular the experience is the brand – whatever you say or do about the game outside of the game will pale in significance over what real players say, share and feel. The job of brand marketing is to augment and share the truth of those experiences and feelings – not attempt to portray them as something they are not.
An analytical framework for “brand marketing”
Just because “brand” is abstract doesn’t mean it can’t be measured as part of a quant driven marketing approach. In fact almost everything in app marketing can be performance based. The trick is to internalise that attributing performance to “last click” only is a misleading view of what’s going on. Just because it isn’t easy to track something doesn’t mean it isn’t there. Somewhere in a consumer’s head there has been a process of “wow – what is that?” (I’ll call this “Awareness”) to “I love this / have to check it out” (I will call this “Interest”) to “give me the link to install” (I’ll call this “Conversion”) and a set of subsequent steps to ultimately become engaged and monetize. The impact of brand marketing can simplistically be modelled as impacting Awareness and Interest (which both drive more people into the conversion stage, as well as driving down CPI for the folks already there). Post install metrics are far less likely to be impacted to a meaningful degree. There is some potential for it to increase trust and thereby spending / LTV but I haven’t seen it personally and will ignore that effect here. (By the way Awareness, Interest and Conversion are just semantics – there are other words you can use, and specific measurements you could use for each, but the principles should remain the same.)
The way the vast majority of mobile app marketing is done today – by buying purely conversion oriented advertising – forces Awareness, Interest and Conversion to all occur in a single step for the consumer. It’s easiest to measure and it is the lowest hanging fruit approach, but will both limit your max growth and achieve it less efficiently. Performance based ad units excel at conversion but are not the best at creating either Awareness or spurring Interest. And the higher these two are, the cheaper the Conversion and the further out it pushes the saturation point where you can no longer acquire users profitably. After all people will only click on the link if they believe it is interesting. A picture illustrating the effect of more comprehensive marketing below. The CPI curve for any segment is lower with broader Awareness and Interest, making UA more profitable and pushing the point of saturation further out.
The reason media mix works is both because it addresses the above steps separately, and also because modern cognitive science suggests that the brain places a premium on the coherence of the information from multiple sources when making decisions. An interesting digression on the topic from Nobel laureate Daniel Kahneman here.
You can a/b test your way to the right creative and media mix it in the long term but it requires a leap of faith initially to try it out. Traditional marketers are more comfortable with leaps of faith than those used to pure performance based numbers. But the payoff for getting it right is huge.
Initially the optimal strategy will almost always be to buy normal performance based ads including video performance based ads which give a better view of the title. You should get the lowest hanging fruit that way. But over time to expand who you reach you need to be more sophisticated. The more core the audience that you are targeting or the more convincing you think they will need to try out your title, the more important it will be to get this right over time. Here is a suggested framework to get there.
1. Develop quantitative targets for your acquisition funnel in terms of Awareness, Interest and Conversion
Awareness: This is the finite universe of your addressable audience or potential players – for example the 240M or so active iOS or Android devices in the USA (Mary Meeker 2013) – clearly the market is global, but marketing is likely to evolve to be more regional. Casual / universal games likely need to target this entire population for awareness. More core / limited appeal games can probably break it down to a smaller addressable audience based on wants and needs. The awareness metric is fundamentally about what portion of this addressable audience is aware that your product exists through organic or paid means. Awareness should always use the addressable audience as the denominator – having a million people who are aware but will never be a valuable user for you is a waste of money. Tools to get there span from TV to online video, social marketing and PR. The traditional outcome metric is Nielsen. It will be interesting to see if a different metric will emerge for Awareness in mobile.
Interest : After hearing about your game the reaction among your potential players should be “yey, where do I get it!”. The tools to generate interest vs indifference are primarily finding a way to show gameplay in a way that evokes a reaction and differentiates the product, as well as using ratings / reviews / stars / accolades to substantiate the message. Finding a way to measure reaction to the imagery / videos beyond click through to actual “rating” is an important area of innovation. The traditional Nielsen metrics of Rating Among Aware (RAA) and Definite Purchase Intent (DPI) used in console are not applicable for F2P. Mobile will likely develop its own more precise rating metrics of what is a favorable rating polling after video adverts and equivalent. An interesting development in this direction is www.loopme.biz who have ad units allowing for consumer feedback for example.
Conversion : The portion of aware users that rate your game should now install it, become players and – down the road – ideally paying users. This toolset is well understood and amply supplied by companies like Grow Mobile, Fiksu, Fetch, Mobile App Tracking and others. The basic approach is to test tons of creative and channels, observe the outcome in terms of downstream behavior and then optimize the CPI / LTV arbitrage by channel and demographic.
These target funnel metrics should be informed by baseline organic performance of the title and a sense of what the title is (step 2 below). In this example the assumed initial efficiency loss is 90%. This reflects the fact that any resources spent on making consumers aware that ultimately did not end up satisfying the target condition (here somewhat arbitrarily retention beyond D7) were not deployed efficiently.
Once the marketing campaign is live it is important not only to optimise each conversion step, but also to optimise away from top funnel investments toward audiences / channels that ultimately don’t convert toward a greater focus on those who will. The baseline metrics from beta and early performance marketing efforts should provide assumptions and also begin to refine the view of the target audience to mitigate efficiency loss. At the conversion end this is called ‘look-alike’ targeting – but it should extend to creative and awareness / rating efforts also. A zero efficiency loss is neither possible nor desirable in that a great product will generate awareness on its own, some of which will never convert.
It’s worth noting that there are still very real tracking issues associated with mapping the full funnel above, as well as significant targeting challenges outside of Facebook. This is an evolving space. The solution is a combination of finding creative ways to track the full conversion path for at least a statistically significant number of consumers, as well as being comfortable with econometric modelling where full tracking isn’t available. Initial Capital is actively participating in this space through our investment in app marketing analytics and a/b test provider swrve.
2. Establish a messaging platform – Develop how you portray the game based on the above view of target funnel metrics, respecting exactly what your game is and who it’s for. Develop the high resolution graphic assets, video assets, words you use and don’t use, personality etc based on a combination of intuition and testing. And figure out how to tailor this message and make it resonate with your player base so they will do the heavy lifting on awareness through distribution / sharing to friends for you both through product integration and outside of product on Facebook, Youtube etc. This is a fundamentally a different skill set to performance buys and needs to be as close to the product team as possible. A good example from the console world is Battlefield 4 with the differentiator “Only in Battlefield” based on unique game play features not available in main competitor Call of Duty: Ghosts.
In mobile this is just starting, but the advert below for Candy Crush Saga begins to show how this space is evolving
Genuine viral sharing of assets is still in its infancy on mobile. Solutions by Everyplay and Kamcord to share video clips are charting the path forward here. The holy grail of messaging is to show a tailored, evocative piece of content, endorsed and ideally generated by a friend, on a channel where you are likely to take action. This space will evolve quickly.
3. Establish a channel strategy and model for experimentation – given the metrics framework from point 1 above and the messaging platform from point 2, you can now figure out both 1/ what channels to try out for that creative and 2/ what relative budget allocations to attribute to them and continue to optimise and a/b test your way forward. Once you get some data you can begin to forecast how many impressions across different channels you need to establish the target funnel metrics from point 1, and you can begin to understand what building up to a certain scale will cost you. For example, you should uncover the correct relative level of investment and detailed execution of TV vs online video vs mobile video vs social campaigns and viral sharing features to get to the target Awareness in a similar way as to how you are currently optimising the conversion part between different performance based networks.
It’s critical here that you have a cross channel attribution model that allows you to attribute value not just to the “last click” to install, but rather also to all upstream activities targeting Awareness and Interest ahead of that. Given limitations in data – for example figuring out who saw a TV ad – only some aspects of this can be tested in the near-real time we all love so much. For others you have to be comfortable learning in weeks and months instead of days, and using inferred value through econometrics rather than direct attribution and sometimes testing across countries that tend to behave similarly (like Germany and Austria). But the benefits are huge. If you don’t already have a data scientist on the recruitment list for your marketing team you should probably start looking for one.
It’s worth re-iterating from point 1 that at all times the key is to focus on the folks who ultimately become valuable to you – the highly engaged folks and the spenders. The D7 target is just an illustration for simplicity. The less money you spend on folks who ultimately don’t contribute value in one way or another the better. But the upshot is that brand marketing can and will become a science as well as an art for mobile games. Brand marketing expertise will not determine if your title is successful initially or not, but it will play a critical role in transforming a success into a global lasting winner.
The road ahead
Up to now the fastest pace of innovation in mobile app user acquisition has happened in ‘last click’ performance advertising with mobile ad networks, both in inventory and tracking. The big innovations of 2013 were the rise of mobile video ad networks and most recently Facebook launching their well functioning mobile ad product. We will see more of these in the future, and likely also the rise of real-time-bidding (RTB) in purchasing these impressions.
Some of the biggest innovations in mobile marketing in 2014 will come from enhanced tracking and an increased use of broad marketing strategies. It is interesting that App Annie, one of the leading app store chart tracking services, just launched a basic mobile advertising analytics product in beta – another sign of things to come. Learning will take time and the companies which develop a profound understanding of media mix and their own funnel metrics will begin to build that sought after “publisher leverage” that will create and cement the position of global winners in the market. Count on some exciting years of learning ahead!
Do you have a different view of the direction of mobile marketing? If you do we’d love to hear from you. We think about this a lot – as you can probably tell.
Very interesting. If you are in London anytime soon, I know a few people who would love to hear more. Hope you are well.
fantastic piece. could discuss this for hours. Part of the solution here is also around human capital and around bringing traditional CPG marketers into mobile 😉
Fascinating post Kristian, I agree with Alan, you should deliver this presentation in London sometime! (cough).
Great post Kris!
Thanks for this really thoughtful piece Kristian
You mentioned John Riccitiello’s presentation, where one of the key points was that great brands had to find ways of sustaining innovation, citing Angry Birds as one that has somewhat rested omits laurels (which is something I agree with).
To what extent can this Framework indicate the best way/time to extend a brand e.g. when will it be time for Candy Crush 2? and I guess the follow-up question is that do you think market leaders in the digital space will be more susceptible to disruptive innovation given the low cost of entry when compared to the console market?
N
Good question and I don’t think this framework answers the question of timing a sequel or brand extension. I think that’s a whole different analysis. I do think it’s an important topic that probably the Angry Birds guys think more about than anyone else 🙂
As to the susceptibility to disruption. I think the rapid iterations in hardware and low cost of innovation makes the whole world susceptible to disruption. Mobile games are too. That said the disruption potential is likely less than it was a year ago or two years ago given the environment of increasing costs (both marketing and production values), as well as relative near term stability of hardware (iOS and Android are likely here to stay at least for some time).
Thanks for the reply 🙂
Going back to the branding question, using Candy Crush as an example. Do you think that it is harder to build a brand with long term sustainable value where an increasing number of games are aiming to grind through a large number of players? I ask this because perhaps this may make it harder to “love” a freemium type game where the majority of players have not paid for it.
e.g. how many people are still mad about Farmville despite it having over 100 million players a few years ago – what is it worth now?
Contrast this with “old media” titles such as Tetris where it is one of the big daddy brands…
I wonder how transient some of these newer titles may be particularly if there is not enough focus on the right type of emotional engagement? I think maybe too many games have a strategy where the user experience drives the business model as opposed to the other way around – the latter I feel may have a better chance of driving more emotional attachment in the longer term.
You could argue perhaps that the framework is more centred around when is the best time to go into brand advertising overdrive, but it would be nice to identify “long term emotional attachment” as a capability you could factor in i.e. will enough people love your game?
N
Thanks for the added comment. So I agree violently that product design should always be about designing for love for the product in the long term, not short term monetization objectives. I was always highly sceptical of the “san francisco school” of quant first game design that churns through players. In fact if you peek at my “funding the future of mobile games” presentation I always advocate making what you yourself love playing – that way you ensure you will earn the love of others. I don’t think there’s anything inherently wrong with the platforms of business models of today in terms of being able to support products that are as loved or as sustainable as they have been on other platforms.
It’s clearly early days and not easy, but this post already felt really long just scratching the surface of brand marketing without touching on product. As primarily a product guy I may have to address your question as part of a separate post at some point!
Regardless your point is well taken. Player love and long term attachment is still the largest multiplier to your success, all marketing considerations aside.
Excellent piece! The evolution in marketing for mobile / tablet games will be a tremendously interesting space to watch in the coming years.
As a side note, yet related. I feel it’s only a matter of time when the first “AAA console title” will launch on mobile / tablet, taking as its marketing approach pretty much exactly what you depict in your post. Putting so much more attention to the detail of its marketing creative and pushing the media spend far above what anyone is doing on mobile / table currently. The install base is now there and the potential revenue is there. So far though, no-one is investing in a 100M+ game production and the corresponding marketing campaign needed to generate the awareness, interest and desire (& action (conversion)). Only a few “pure mobile ” players has a wallet that fat, and somehow I doubt the “big and old” console publishers will have the courage to do it. When done correctly, I believe the rewards can be massive.
Great post Kristien. We’ll hope it’ll work for high Quality products targeting a smaller audience too.
Kristian, great piece.
I’d argue – and am sure that Facebook themselves would vehemently do so as well – that FB performance ad units are effective *specifically* because they are great at creating Awareness (“oh! Petteri is playing …”).
As you point out, the same certainly goes for Everyplay, albeit with a different ’social graph’ between players. I think Minecraft’s success of (non-paid) player acquisition through Youtube is the prime example here.
Thanks Nikolaj – FB is killing it on mobile ads precisely because they are the best ad unit with the best targeting out there today. I look forward to seeing more of these channels evolve to compete over time. Good point on minecraft – nice example how you can build top funnel metrics around Awareness and Interest just by getting your players to share for you.
Great post. We do think a bit about brand at Rovio 😉 Agree that brand will be even more important going forward and we are beefing up our brand activity…
Hi Kristian
Thanks for mentioning App Annie’s latest product release as a “sign of things to come” – quite an honor!
In a former life I ran digital marketing for a large UK eCommerce business that was also a heavy TV spender. Considering the interplay of TV-based brand reinforcement with digital direct response advertising was absolutely central – your article really rings true. It will be interesting to see the increasing sophistication of advertisers in the mobile space as they move towards these kinds of concerns.
For now, it’s remarkable how most app marketers are still hamstrung by basic problems. We’re building products to cope with some of the fundamental gaps that still exist, beginning by making it easier to get a quick and accurate overview of activity across networks. Our hope is that if we can lift the burden of maintaining spreadsheets and reporting API integrations, we can help marketers get back to spending their time on their core, value-adding tasks.
Hi Matt,
Great comments – thanks. And agreed it’s exciting to see these fundamental building blocks being built so quickly on mobile. Congrats on all the success so far. Look forward to seeing where you go next and how the advertising tracking product evolves!
I like the way you break it down Kristian this is a huge problem for apps in our industry as we lose so many people from the pool of our target market to those we actually retain. I would love to touch this topic in the blog I am starting and love to feature you as a guest post. If it’s ok…
However when finding a solution to this problem people will immediately increase interest in their ads from the people they make aware which will allow you to reach more of your target market, right. Then a company will aim to retain more users which will increase. These are all very effective and I am planning to do in my game. However I think you see companies like supercell just buying more awareness which is highly effective for them. However I like Candy crush strategy of using retaining users to push app to more people and throwing more people immediately in the interest section of the funnel bypassing the drop off section of the funnel between awareness and interest. Thus they solved the problem this way, do you agree more focus should be spent studying that in addition to increasing awareness, interest, and retention rates?
Thanks for the comment. If I understand you correctly you are asking if encouraging users to share virally is important. I think that’t probably one of the best ways at increasing the awareness and interest in an app. I don’t necessarily think heavily incentivised systems work that well on mobile, but both measurable sharing through social networks like facebook, g+ and twitter as well as the kind of unmeasurable water-cooler style sharing are incredibly important – in some cases as important asall other marketing combined. So designing for that is key. This post didn’t touch on it much as I was predominantly focused on brand marketing. But I agree it’s important.
Lol water-cooler style sharing that’s super important, only he coolest games get talked about at the water cooler.
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