The Smartest $5,000 You’ll Ever Spend on Your Mobile Game: Q&A with Rovio’s VP of User Acquisition & Engagement

This post originally appeared on Playbook, Chartboost's blog dedicated to the business of mobile gaming.

User acquisition isn’t just part of the mobile gaming engine — it’s the fuel.

Rovio’s new VP of user acquisition and engagement has a challenge on his hands: an empty tank, of sorts. Just a few weeks into his new gig, Eric Seufert must introduce players to the studio’s newest titles, which aren’t as instantly recognizable as Angry Birds, Rovio’s hit brand.

Seufert admits that gaining player traction in an app store in 2008 was much easier than it is in today’s saturated marketplace, but these challenges aren’t a turn off. The native Texan, who now lives in Helsinki, says the equation for mobile game success starts with understanding players through your data — and spending dollars intelligently to acquire more.

Here, we chat about what an indie shop’s UA strategy should cost, why UA spend should not be considered marketing spend and what excites him most about the future of mobile gaming.

Pepe: We see a lot of user acquisition managers at mobile gaming companies today, but at Rovio you have combined acquisition and engagement in your new title. What excites you about this role?

Eric: I’m passionate about UA because I think it’s the perfect intersection of business and analytics. With UA, you’re exposed to both sides of the company: You get to see all the strategic decisions made around target demographics, but then you also get to really dig deep into the analytics side. I think it’s a good way to hit both sides of your brain. I don’t see user acquisition as this restricted, specific role within the development of a game, though; I see it as a really important role throughout the development cycle and then after launch, too. So the type of work I’ll be doing is a little more fluid than just being the person who does paid campaigns. I’ll also act as a resource for the development team throughout the entire lifecycle of a game.

Pepe: How does user acquisition play into the larger landscape of mobile gaming?

Eric: In my opinion, the app economy is the most competitive marketplace that’s ever existed. The barrier to enter into that marketplace is extremely low. And because the potential rewards for being a popular app are high, people are spending lots and lots of money to market their app. For example, Supercell reportedly spent something like $440 million last year on marketing. Not all of that was on performance UA, but a huge chunk of it was.

There’s also a lot of science behind this now, and there’s no opportunity to get your app seen unless you market your app intelligently. Now you have these awesome analytics frameworks that allow you to capture data and target your user very precisely. You’d be remiss in not spending money on marketing when you know that you have the analytics support to know how your game can be profitable.

Pepe: Sure, but not everyone knows how much to spend on user acquisition until they have certain traction. If you’re brand new in the App Store or you’re a smaller developer, what do you do?

Eric: I think it’s more of a mentality. I hear people say, ‘I don’t have a marketing budget,’ but that to me is insane because developing a premium app requires gathering data before you actually launch it. I think it’s wrong-headed to think about UA money as ‘marketing budget’ — especially for a soft launch. That’s what’s needed to develop your app. It’s got to be a basic step in your development budget forecast. But then I think people say, ‘Well, I don’t know how much to spend,’ or ‘I’ll just put the app out.’

App stores are not designed to spread people’s attention equally around every single app that’s submitted. They’re designed to be winner-takes-all. So when apps from small or new developers rely on all organic or non-advertising driven downloads, [they’re ignoring] the fundamental structure of app stores.

Pepe: You mentioned that marketing budget should be seen — especially in soft launch — as a development budget. If you had a brand new title and you’re brand new in the App Store, how much would you spend on a soft launch?

Eric: I think you can do it on $5,000 to $10,000 — it doesn’t have to be $100,000. You can gather a decent amount of data with $5,000, especially if you have a sense of the core demographic that you should be targeting. And when you think about the overall development budget of the game, to not gather crucial feedback about how the players use your app is silly. This isn’t just for the sake of trying to figure out what the LTV is, this is for seeing how the first-time user experience looks and for seeing where the choke points are.

Pepe: Right. And $5,000 probably gives you enough to gather the crucial data. For Supercell, though, $400 million in marketing means around 25 percent of its revenues were thrown at marketing. How do you scale? Do you think 25 percent is a good ratio?

Eric: I think if 25 percent got them to where they are then it must be a good ratio. I wouldn’t focus on the ratio. I’d probably focus on total aggregate profit. Given the amount of profit they made, it’s hard to question any of their decisions, though.

Pepe: I’m just trying to get the secret recipe out of you …

Eric: I actually don’t think there’s a magic ratio! It ultimately comes down to what the profit is, so I think it always depends on the type of game. I mean if they had a really casual game, I think the ratio would probably be higher because they didn’t have to get a big user base to generate the aggregate revenues. I think for them, 25 percent was the optimal spend level to maximize profit.

Pepe: You’ve been in the industry for nearly five years. What is it that makes you passionate mobile gaming?

Eric: I think this is the point in history where the most people have played games. The barrier of becoming a gamer when I was growing up was huge. Gaming was generally restricted to the middle class. I still remember when my grandfather bought me a Nintendo when I was seven. We went to Toys ‘R’ Us and he bought it with a $100 bill — it was the most money I’d ever seen before. That was a lot of money in 1992!

Fast forward to today and I was just reading about how in South Africa the mobile phone penetration is skyrocketing because one of the local carriers introduced an Android phone that’s around $20. All of those people buying those phones are going to be gamers. They’re going to download a game. If you make a mobile game that’s a hit, you could reach billions.

I’ve also heard that the first application of any new type of technology is in a game. The way you penetrate popular IT is through the technologies of games (because games get people excited about the technology). I’m so excited about mobile gaming because it’s the broadest format for gaming and all these new demographics are playing games for the first time.

Pepe: And where do you see mobile gaming in the next five years?

Eric: Well, for one, mobile games are definitely getting more beautiful. All the people that worked on the huge AAA games for console are now being exposed to mobile games, so we’re just seeing really, really cool games come out on mobile that rival the graphical fidelity of console games.

In general, mobile games are getting a lot more connected and definitely more social. It’s exciting to see this social phenomenon that people experience on console when they play multiplayer Xbox or have friends over to play video games happening on mobile. As people become more social in their mobile game play, developers will make more engaging experiences — allowing them to earn more money and build even bigger games.