What can retail teach us about mobile monetisation?

Jonathan Harrop, senior director of global marketing & communications at AdColony, discusses the strategies adopted by brands that may also prove fruitful for game developers

The gaming landscape has changed an awful lot over the last 10 years, especially for game developers. Avenues for distribution (and revenue) have increased exponentially through the rise of mobile, social, and casual gaming.

The Free-to-Play (F2P) distribution model has also lowered the barrier of entry for both aspiring and experienced developers since the net addressable market is essentially anyone that owns a device for which you can develop.

Yet despite development and distribution barriers being removed, very few studios are lucky enough to strike the x of mobile monetisation. Overall, independent app developers’ average monthly revenue is $1,500 a month, but nearly three-quarters of independent app developers make less than $1,000 a month.

Where does all the money go?
At GDC a few years ago, game industry legend Trip Hawkins explained: “We don’t have the bottlenecks we used to have in the old distribution system. The shelf space is infinite, but it is really hard to monetise.”

It seems that while streamlining the product pipeline and removing some of the barriers of publisher agreements and distribution, making money in games actually got harder.

Hawkins went on to say: “It’s about thinking about your game like you’re the merchandising manager at Bloomingdale’s. Once you have made a game that has good lifetime value, then you can afford to buy marketing.”

There are two great takeaways from those comments:

  1. Infinite shelf space is not always a good thing, as nobody has really solved the problem of shopping infinite shelf space.
  2. There might be some vital functions that a publisher or distributor can add to make your game consumer-ready.

Game developers are excellent at coming up with great concepts and interesting game design, solving unique challenges, and generally creating fun experiences. I say this with an enormous amount of love, respect and admiration, having been a consumer of their products for the better part of 33 years, but game developers are usually not experts at selling products to consumers.

While distribution is now easier, it has gotten more difficult to turn that opportunity into money. Losing the publisher and retailer means that you also lose the vital role of making your product ready for sale.

For most developers, marketing equates to promoting your app in the right social channels, placing ads in the right networks, and figuring out the right time to release. Selling your app (or items in your app) to consumers requires a little more research, planning and execution.

In this two-part series, I’ll share some strategies for game developers that brands and retailers have embraced for years, starting with ‘Do your research’.

Know your shoppers
Brand marketers and retailers spend an insane amount of money on shopper insights: demographic (who, what, where), and psychographic (why) data about consumers. This helps them understand who their customers are, how much they make, what products they want, how much they will pay for those products, and what advertising can do to affect any of those decisions.

While most mobile developers likely won’t have the funds for the same scale of consumer panels or user research, there are plenty of consumer insights relative to mobile gaming out there if you look. Some are free, and others you can access with a premium subscription.

Learn who is buying, what regions are buying, how much they are spending, what are they spending on, what motivated them to spend, and if that is projected to change in the future. This can inform game genre, design, localisation, monetisation methods, and also help to target your marketing spend.

The more you know about your shoppers, the better you will be able to a) find them, b) advertise to them, and c) keep them shopping with you. Also, make sure you engage your shoppers with meaningful communications. Message them (via in-app or email messages) with important updates, promotions, and events, ask for feedback, and, most importantly, thank them for being your customer.

Understand the competition
Retail operations, marketing, and merchandising organisations take a very aggressive approach to understanding their competitive landscape. Learning about competitors’ promotions, marketing tactics, loyalty programs and business practices provides valuable information that can shape your own tactics.

Does a competitor’s game promote or mark-down specific products in the store? If so, when, and for how long? Do they have a gift-with-purchase, or a discount when you purchase in bulk? What are they selling in their store, and for how much? How do they merchandise their shelves?

The process of studying successful competitors can help you learn best practices so you can replicate and improve on them, as well as identify bad practices so that you can avoid those. Research, while time consuming, can make a big difference in formulating your response to competitors. Utilising an app indexing service like Apptopia can help you understand the competitive landscape and the players in your app/genre, but it’s up to you to do the work.

Second part can be read here.