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Misadventures in Mobile Advertising

"Taken together, all of these factors should contribute to an overall CPI goal that backs out in an ROI-positive manner" -- is this actually English?

Some of you may know that we recently released our first ever free-to-play title, Combat Monsters, on PC and mobile (iOS/Android). It’s been out a couple of months now, and I’ll write a post-mortem later on how that went—in the same vein as all my other PMs; if you can’t wait, the short answer is “reasonably well but could be better.”

But that’s not what I want to talk about now. What I want to do now is to have a really, really good rant--partly to blow off some steam and partly in the hope that mobile advertising publishers may read this and then re-join Planet Earth.

The main reason many indies go the free-to-play route is simply because the lack of a download price removes the barrier to entry and provides squillions of ‘easy to get’ players—at least for a quick look. 

This is definitely true in our case (and I’ve written about this in the past). We have a fairly niche game—meaning there’s no farm (or farm animals of any sort) in it—and there is actual gameplay), so we need to get it in front of a lot of people. The plan being that the small percentage of downloaders who will play a game without the words “clan” or “saga” in the title can still equate to a decent sized audience.

So we started to look at in-game advertising—but the more conversations I had with various providers, the more divorced I felt from reality. I actually started to feel like I was being conned. Seriously, nothing adds up. But first...

Is this actually English?

This is a paragraph of text from the end of a recent conversation in which I questioned a person’s numbers. I’ll get to those numbers in a minute, but I really need to get this alien text down on paper before I explode. Here it is:

Your numbers below are correct, but you're missing a couple variables that should lower that ARPPU number. The primary goal of performance advertising (UA) is obviously to drive downloads directly at a "reasonable cost." But the secondary benefit is that advertising increases the organic lift of your user base. You're absolutely correct that a minority of users will ever pay for an IAP in your games; but the other 95% are absolutely essential for driving more users to your game - whether that be chart position or social sharing with their friends. Further, these "non-paying" users can be monetized if you choose to incorporate ads into your games. Taken together, all of these factors should contribute to an overall CPI goal that backs out in an ROI-positive manner.

Sorry, I just don’t speak this language. Are you using it at me to put me on the back foot? I’m the guy with the pocketbook, so why drive me away with all this technical drivel?

(In case the author recognises this, I apologise for singling it out. All contact I’ve had with advertising providers uses the same insider speak, so am just using yours as boilerplate. In all cases, I explain that I’m a programmer looking to promote my game—so talk to me like one. Please.)

For the sake of other developers who are thinking about advertising their games, I’ve provided a crib sheet of the terms above, based on nothing but intuition.

  • User base:  I think this is “players”
  • ARPPU: The noise my brain makes when trying to figure out buzz-speak
  • Performance advertising (UA): “Performance advertising” does not acronym down to UA. And if there is “performance” advertising, why is there by implication some “non-performance” advertising. Who wants that?
  • Organic lift: Seriously no idea.
  • CPI: I assume this means “cost per install.” But I want to advertise, not install anything
  • Backs out: [Shudders]
  • ROI-positive: Worthwhile?

So let’s look at the numbers. Who wins?

It’s been reported recently that ‘paid acquisition advertising’ (see, I learned a phrase!) was expected to hit $7 per install in the run up to Christmas.

There is an accepted maxim amongst free-to-play developers that you will only convert about 5% of your downloaders into paying customers, for a variety of reasons—very few of which are related to the quality of your game. Combat Monsters is actually double that—but that’s still on message with a generous standard deviation, so I’m going to use that 5% for my illustration.

At 5%, one in 20 downloaders will become a paying customer. At $7 per download, you need each of your paying customers to spend  $7 * 20 = $140 just to stand still. 

Let me just state this again, since it would be easy to not understand this obviously ridiculous proposition: Advertisers expect every single one of your paying customers to be worth $140. Oh wait: Assuming you sell your currency through the App Store or Google Play, you’ll need to actually get $200 out of EACH OF YOUR CUSTOMERS before each store takes their cut and passes back that $140.

Is it just me that finds this preposterous? I mean seriously, what the hell?!? No wonder there’s so much whining about F2P: It may cost hundreds of dollars to play one of these things.

On the other hand, I think it’s clear to see who the winner is...

Do these people live in the same commercial sphere as me?

Several times now, I’ve been contacted by various companies providing some sort of “free app a day” service. The premise for this is that they have 10 bazillion punters checking their twitter feed or webpage every day looking for free games.

I’m usually offered somewhere between 100K – 200K installs from this, but no guarantees of course. And the cost of getting around 150K self-selected freeloaders to try my game?  Oh, somewhere around twenty to thirty thousand dollars. Yes, really! (I typed it longhand so you wouldn’t assume a typo.)

Let’s try a visualization experiment. Imagine you know a small indie who needs help like this—and who just happens to have, say, $25K handy. And from that I can get around 150K installs. Well, we’ve gone past 150K installs on both iOS and Android—and at that point, we’d made less than $25K from either version. And these weren’t people hanging around especially looking for free games either, mostly existing fans of our earlier games and (hopefully) predisposed to try another one.

Tip: The winner is not you... or me.

How fair is this exactly?

Back to paid acquisition: That $7 mentioned above represents a predicted increase from a very solid base of $2-3 that’s usually quoted per install. This still means that you need every single paid user to be worth $86. Outrageous! 

I keep redoing this math because it doesn’t work. There must be a misunderstanding on my part - there must be - but I can’t find it.

Back in the real world, Combat Monsters is currently averaging 13 cents earned per download. We have decent but not crazy numbers to base that on, and a whole bunch of glowing five and four star reviews. Hubris aside, the game is officially “good” according to our players. So 13 cents should be about right then, shouldn’t it?

So why can’t I advertise at a rate where I’m paying at least close to 13 cents per new download?

This is why I’m starting to feel like all of this is a con. There is such a massive disparity between the results I’m seeing—and the assumptions being made about those results by advertisers—that either they’re massively over-valuing their service, or there is something cripplingly wrong with my game’s monetisation... and I really should be a millionaire and not getting stressed by crap like this.

Nope, I really did get it right.

Having developed the pox from the perspective of large online media sites who just won’t cover us, we need to get the word out about Combat Monsters somehow. (We believe the game is far superior to the press-magnet known as HearthStone for example. ) So I went to go set something up as a test. Dip a toe in the water as it were.

Apple’s own in-app advertising seemed like a quick and easy way to try something out cheaply, and I assumed that “it’s Apple” is reason enough to trust that their prices are representative. So off I went to set something up, determined that I’ve misunderstood the true costs I’ve been ranting about, and that all would become clear when I put some real numbers in.

I put some real numbers in. Here they are:

The above is for spending $500 over a week of advertising using iAds. Their own website calculates that from my $500 investment I can expect to see 8 downloads. Really?

We get over 500 downloads a day just from being an available free to try game. Surely they don’t expect me to spend $500 for 8 more?  Who would do that?

Plugging that estimate back in to my own numbers, 8x13 = 104. So for each 500 bucks invested, I get back $1.04. Or put another way, each time I pay Apple $500, I simply lose $498.96. Sounds compelling huh, where’s my check book…

Let me just flip that over and provide another view of the data. Apple expect me to pay $62.50 for every single download they pass my way. They value a download at $62.50, whereas I value it (using actual performance results) at $0.13.

Does ANYONE think this is a good deal? I certainly can’t afford that. I think I need to go find a much cheaper advertising alternative, so will give Saatchi and Saatchi a ring later…

And the winner is…?

(oh, by the way. I’m not singling Apple out here. They’re pretty cheap compared to some of the other things I’ve been hearing. I simply tried them first. Afterwards, there seemed no point trying other sources.)

But wait, there’s more. We sell advert space, too!

Several times now, we’ve read online about developer X who put advertiser Y adverts into his game and instantly made an extra $500 a day. I’m not even going to link to one; the Internet is full of these. 

So we thought, ‘A-ha, those guys not paying any money can pay with time instead and watch an advert’—so we put interstitial adverts into the game for players who’ve yet to spend anything, plus a message that a payment gets rid of them.

We didn’t want to alienate people for nothing, so we tried them at less than full volume in a place that generates 7,000 views per day on average—with 1,000 installs of the app being advertised. In all fairness, this is not a great number—and we could increase it dramatically if we cared to. Here’s why we didn’t.

For those 7,000 views, we get paid about $17. That’s $0.002 (zero point two cents) per view. Or if you ignore the impressions and look just at the installs, each install we generate pays us out the princely sum of $0.017 (one point seven cents) in return. 

Apple want to charge us $62.50 for each download they provide, but this Advertiser (who is meant to be the best payer) is giving us just over a cent for one.

I just deleted another paragraph that was drawing comparisons between those two numbers, but none is really needed is it. Pretty self-explanatory all of this.

And the winner is…?

I’ve finished ranting, so now what?

In 2014, we shall be removing all the various advertising streams from all of our titles—and not replacing them with anything else. That means a couple of our minor games, currently just supported by adverts, will be going totally and utterly free. I really would prefer to just give them away rather than continue being taken advantage of like this. Thanks to the intermediates’ greed, we make bupkis out of them either way.

We’re a small indie firm struggling to pay mediocre wages to an experienced team that deserves far better in my opinion. With that in mind, one thing I will not be doing any longer is making middlemen and sideliners rich whilst we, actual content creators, have to live hand to mouth.

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