User acquisition cost benchmarks: secrets hiding in plain sight
How can you find super-valuable data on user acquisition cost benchmarks (and so much more) from top competitors in your space? That’s exactly what we chatted about with Clement Favier, Chief Operating Officer at Adikteev, in our latest Growth Masterminds podcast.
Some of the information he shared:
- 17% to 25% of social casino MAUs are going to be DAUs
- 2% to 5% of DAUs will be payers
- SciPlay and PlayStudios grew over 10% last quarter
- Average spend on user acquisition is 24% to 28% of revenue
- Modern Times Group spent 39% of revenue on UA
How does he know all this? Read on …
User acquisition cost benchmarks: publicly available information
It’s publicly available information, and Clement Favier, Chief Operating Officer at Adikteev, has compiled it all from each company’s annual reports. They’re public companies, and as such have to share a significant amount of data about their operations, their costs, their revenue, and much more.
“Some will label it as advertising cost, some will label it as user acquisition spend,” says Favier. “It’s pretty much aligned on how much those companies are actually spending on marketing … I would say a rough average would probably be between 25 to 28%, and it goes from 24% of revenue that is actually allocated to a user acquisition span — that’s the case for Play Studios and CyPlay — and it goes up to 39% for Modern Times Group, for instance.”
It’s a novel way of looking at marketing comparables and finding user acquisition cost benchmarks. Most of the time mobile marketers are probably looking at owned data, looking at any shared data they can get — see Singular’s Ad Benchmarks, for example — looking at insights adtech company reports share, plus a few other ad intelligence sources.
So checking public company records for user acquisition cost benchmarks is a bit different.
The most likely reason: mobile’s pretty new, and before the last few years, there hasn’t been a lot of time for gaming companies to mature, IPO, and get on a stock exchange.
Now, thanks to growth, consolidation, acquisitions, and more, that’s changed.
Apply a grain of salt!
Of course, as Favier notes, all data insights have to be taken with a grain of salt and a hefty dose of context.
One key piece of context is the phase of the company: growth companies will naturally spend more, while companies that are consolidating and taking profits will naturally spend less. There’s a balance here too: while larger established players with known IP probably enjoy higher efficiency than relative unknowns, they may already have occupied their easiest niches, grabbed all the low-hanging fruit, and now have to jump or build ladders to get to the next tier of potential players.
But a marketing spend of 24% to 26% of revenues seems sustainable, Favier says.
“For those companies I mentioned earlier, I think that all of them are profitable with a positive EBITDA margin, so basically profitable,” he told me.
“So you could say that they’re all growing obviously, but also in a mature stage. So they think they’re not overspending and those are really considering their user budget very carefully and looking for profitable user acquisition. So this benchmark of 24 to 26% of revenue allocated to user acquisition seems to be really something that’s sustainable over the long term and that can be taken as a good proxy.”
All-in costs: user acquisition and team and tech and …
The good news about calculating marketing spend from public filings of traded companies?
It’s all-in.
Marketing spend isn’t just the $4-5 you spend for an install or the $20-50 you spend for a paying subscriber. It’s also your tech costs, your human costs, your creative costs … your infrastructure costs.
“When they report their cost, those companies actually have two layers of cost related to marketing,” Favier says. “The first one is just overall marketing cost, which actually includes UA spend, but also the cost of the team, etc. And this figure is also reported. It’s obviously higher than the user acquisition spend because it embeds it. So that’s also a way to assess a little bit, probably either the size or the cost of your team as compared to your revenue.”
Also: retention benchmarks
One other benchmark that is interesting for mobile marketers: MAU to DAU ratios. This is a good way to evaluate the stickiness or retention of your app, Favier suggests. In the social casino space, that’s typically 17-25%, so out of every 100 monthly average users, 17 to 25 of them are also daily average users.
Higher, of course, is better, but having these numbers are a guide can be valuable when setting goals for your app.
There’s more, too.
“When it comes to monetization, they disclose two very interesting figures,” Favier says. “The first one is the average revenue per DAU. So how much revenue do you generate per DAU, which is a very good KPI to look at. And they also disclose their daily paying users. So by comparing the daily paying users to the daily active users, you can know their payers’ rates. And that’s going to help you know which companies are super profitable.”
One final thing: this isn’t just relevant to the social casino space.
Any mobile gaming or mobile app space with a number of larger players who are public can be treated the exact same way: check the financial reports, summarize the data, and compare to your own internal data to benchmark your marketing efficiency. That’s available for user acquisition cost benchmarks and — as we’ve seen — much more.
Much more in the podcast
As always, there’s much more in the full podcast. Watch it above, or subscribe to Growth Masterminds on any of the podcast platforms you love, including:
Full transcript: user acquisition cost benchmarks (and much more) with Adikteev COO Clement Favier
Note: this transcript is AI-generated and lightly edited. It may contain transcription errors.
John Koetsier:
What can publicly traded gaming companies tell us about the mobile ecosystem? And can they help benchmark your user acquisition spend? Hello and welcome to Growth Masterminds. My name is John Koetsier.
There’s so much data in mobile. Most of it is your own, right? There’s a lot of ecosystem data, but there’s also super interesting insights in publicly traded mobile gaming companies. And they might reveal something about UA benchmarks and maybe optimal UA spend. That would be helpful for all mobile marketers.
Our guest today has studied this in some detail and he’s a massive industry insider. He’s a chief operating officer of Adikteev. His name is Clement Favier. Maybe I’ve got that right.
Welcome, Clement.
Clement Favier:
Thanks for having me and you got it right. I’m Clément.
John Koetsier:
Okay. Or else you’re too polite to tell me I got it wrong! So it’s all good. No worries. Excellent.
Give us a 30 second bio. Who are you?
Clement Favier:
Sure, so I’m Clément, I’m 36, father of a little daughter. And regarding app marketing, I joined the ecosystem, I would say eight to nine years ago. Pretty much when I joined Adeptive and I’ve been working with the company since then. So focusing a lot on app retargeting, which is definitely what we do at Adeptive. I started actually as a developer data analyst and the fact that I quite like to dig into data in general. Then moved to Berlin for three years when we acquired a company named TradMob which is actually the core of our retargeting DSP. And in the last couple of months I’ve been working more on new business initiatives at Additive. So we’re working on a cross promotion product and we’re working closely with
John Koetsier:
Nice, nice, nice, nice. Now I can tell that you are a former analyst because the way we sort of got connected and this kind of started is you were posting some really interesting insights to your LinkedIn about some analysis that you were doing about publicly traded mobile gaming companies. When did you start looking into this?
Clement Favier:
Well, I’ve always, let’s say, personally been a bit curious about the information you can get from public listed companies. I also have a little bit of a background in finance and the fact that I’m totally okay with looking at annual reports and getting insights into that. But that’s also something we integrated within Adikteev.
We have a corporate analyst who is working with us now. And we think it’s very helpful to basically bring knowledge to the whole company in the market, analyze the trends and basically say see what kind of insights we can extract either from public earnings of companies but also from generic market reports that you can get from a Singular, AppsFlyer, or whatever company who is releasing great insights on the either gaming or app tech market.
John Koetsier:
I’m impressed because I delve into significant quantities of data, you know, and do a bit of analysis here and there in what I do for some of my reports and stuff like that, but spreadsheets for finance and financial data … I’m like, what the heck is this? I don’t get it. I don’t understand it. I hate it and I stay away from it, but thank you for looking at it for us. What companies did you look into?
Clement Favier:
So our scope of research, let’s say, is mostly focused on gaming and mobile gaming companies, which is actually interesting because if you look at overall, you would probably say there’s about 50 companies that could be associated with gaming in general, even more than that, but I’m quoting, you know, what some banks can tell you when they send you reports report and things like that. So it’s a probe, yeah, approximately 15 total. But the question then is, is everything interesting for me? And probably not, especially if we’re talking about app growth. So for instance, companies like Electronic Arts or Activision Blizzard in general, you might think it’s relevant for your market.
But for instance, for EA, only 15% of the revenue is mobile. So it’s probably not a great proxy for looking at the app market. For Activision it’s a bit more, it’s like one third approximately. But that’s definitely something you need to look at. And if you want to dig into what is our peer set or the comparable companies that we think are more mobile focused, I would say it’s between 10 to 12 companies.
John Koetsier:
And give us some names?
Clement Favier:
Yes indeed. So you would have quite a lot of casino companies, Social Casino. So you have Huuuge Games, Wgames, Playstudios, Sciplay. There’s also Aristocrat with its division, Pixel United, which is the mother company of Product Madness and Big Fish. And there are also some other suspects like not in the social casino but more traditional gaming like Rovio, Modern Times Group which is like play simple, Stillfront, also BigBig Studios obviously, and Netmarble for instance.
John Koetsier:
So it’s very cool because as I said off the top, there’s a ton of data in mobile gaming, but you don’t — for private companies — have access to a lot of data on how much they are spending on marketing? What is their overall revenue? What’s their profitability? Other things like that. And metrics like that in different forms and different ways are usually available for publicly traded companies. So what did you see? What did you find?
Clement Favier:
Yes indeed, it’s very interesting. There are different ways to look at the data. And I would say what we definitely look at is, first of all, revenue trends, which gives you a good proxy of how the market is evolving overall. So the latest information we get is actually from Q4, because you know there’s usually a little bit of a delay like one, two months before they publish their results. In terms of the revenue, it’ll just depend on each company. But overall, in Q4, they actually grew slightly. Those companies, as compared to one year ago. So that’s actually interesting to see. For instance, SciPlay or PlayStudios, they grew over 10% in Q4 2022 versus the prior. Playtika was the only one in the social casino space that actually decreased in terms of revenue … minus 3%. And yeah, that’s one way we look at those data.
Another way to look at it, which is quite important, is user acquisition spend, because we’re a mobile marketer, and that’s something we’re very interested in. So first of all, not all companies disclose their US spend.
Some do, some don’t. You don’t necessarily know exactly how it’s computed.
Some will label it as advertising cost, some will label it as user acquisition spend. So you usually get in those reports a definition, so you assume it’s definitely mostly money that is spent on getting installs and probably a bit of retargeting as well. Here it’s pretty much aligned on how much those companies are actually spending on marketing, I would say a rough average would probably be between 25 to 28%. And it goes from 24% of revenue that is actually allocated to a user acquisition span. That’s the case for Play Studios and CyPlay. And it goes up to 39% for Modern Times Group, for instance.
But this one seems to be a bit of an outlier. All other companies are in a very close range between 24 to 26 percent.
John Koetsier:
It’s interesting, interesting, interesting to hear that data, right? And you have to apply some wisdom to that as well, because companies are in different stages. For instance, I’ve seen some companies, I think that the Calm, Headspace type of meditation space was, is an example of that where they went crazy on UA spend for a couple of years and then they went into now we’re going to take profits … and we’re not spending so heavily on user acquisition, and we’re actually just taking in a lot of revenue and banking a lot of profit. So you can have that mechanic going on.
You can also have the mechanic going on where maybe you’ve got younger, smaller gaming startups that are spending like 100% of revenue or something like, because they’re just in the growth mode, growth phase, they have some capital, some VC capital, and they’ve got to get to a certain level.
And then you might have some really established players, maybe a Supercell comes to mind. You know, let’s say, you know what? We have all the growth we want organically or most of it. And we have this amazing player base that just never leaves. We can’t kick them out, right? And so we don’t have to spend the same amount.
Talk a little bit about your thoughts around that. You know, what is the optimal spend and how that relates to maybe the life cycle of a company in mobile gaming.
Clement Favier:
Yes indeed, that’s a very good point. And I would say that for those companies I mentioned earlier, I think that all of them are profitable with a positive EBITDA margin, so basically profitable. So you could say that they’re all growing obviously, but also in a mature stage. So they think they’re not overspending and those are really considering their user budget very carefully and looking for profitable user acquisition. So this benchmark of 24 to 26% of revenue allocated to user acquisition seems to be really something that’s sustainable over the long term and that can be taken as a good proxy.
Obviously, if you are very new with your first to squeeze a little bit your profit margin at the beginning. We know that it usually takes time to beat the game and obviously get returns out of that. So to make your game known, increasing the store ranking, et cetera, you might have a bit of an overspend at the beginning. But I think that most gaming marketers would always look at profitable user acquisition spending which probably might be a little less the case in some other verticals where branding is definitely a bit more of a hot topic.
John Koetsier:
One thing I like about your analysis is, despite not knowing exactly in every case what is bundled into marketing spend and user acquisition spend, there’s a sense in which it’s a truer measure.
Because if you just look at UA spend in terms of CPI or something like that, right, that’s probably the bulk of it. But you have people. You’ve got infrastructure. You’ve got data costs, you’ve got tools that cost as well, and all of that layers on top of what you might spend, $3, $4, $5 for a person to actually click a button and install your game. So that sounds super, super interesting.
Anything else that you found that might be instructive for other UA managers in gaming or elsewhere about doing their jobs?
Clement Favier:
I think what you just said is actually a very good point because when they report their cost, those companies actually have two layers of cost related to marketing. The first one is just overall marketing cost, which actually includes UA spend, but also the cost of the team, etc. And this figure is also reported. It’s obviously higher than the user acquisition spend because it embeds it. So that’s also a way to assess a little bit, probably either the size or the cost of your team as compared to your revenue.
So basically, every marketing cost that’s not spend as a percentage of revenue, would probably also be a metric you could look at in order to benchmark your company against others. Again here, little accounting tricks because you don’t know exactly people are counted in marketing team, et cetera, et cetera. So it’s always, but that’s every benchmark should be taken with a grain of salt for sure. But that’s also something that’s very interesting.
Other KPIs that I find interesting as well from those public statements … you can get a few insights on retention as well as monetization of those games. So they do usually disclose a couple number of additional KPIs, which can be useful in order to assess that. They would usually disclose the number of daily active users and monthly active users. So just, you know, the DAU to MAU ratio would probably be a good proxy for either stickiness or retention.
For instance, here for social casino, if you’re in a range of 17 to 25% of the DAU to MAU ratio, you’re probably in a good spot.
And when it comes to monetization, they disclose two very interesting figures. The first one is the average revenue per DAU. So how much revenue do you generate per DAU, which is a very good KPI to look at. And they also disclose their daily paying users. So by comparing the daily paying users to the daily active users, you can know their payers’ rates. And that’s going to help you know which companies are super profitable.
And if they are profitable by getting a very high number of payers in proportion of total, or if they are actually managing to milk, let’s say in a way, the maximum amount of money of each payer. So is it coming from the value or is it coming more from a good conversion rate and a big payers base? So that’s actually quite interesting to look at in order to understand a little bit the dynamic.
And then as a mobile marketer, you could say, okay, so if I want to know how to maybe increase my payers conversion rate, maybe I should look more at this company because they seem to be the best at it. to look at how to increase my average order value. I should probably look more and benchmark these companies because they seem to be the best at it. So those are additional sides that I think are quite useful in order to educate which company you should research or which topic.
John Koetsier:
I love that. I love that because I mean, they have to disclose a certain amount of data. They also want to disclose a certain amount of data because they want investors to be excited about their company. Look at the number of users we have. Look at the number of paying users we have. So, you know, they need investors to be excited about their company because they want their stock price to go up. So they’re releasing that data, then you can look at the results that they’re getting, then you can play the game. You can get engaged and you can see, okay, how they do it. What do they do? What are the mechanics? How does it work? All that stuff … and see what’s going on there.
When you said daily paying users, is that daily users who pay or is it daily users who pay every day?
Clement Favier:
It’s daily users who pay. Usually they would disclose the exact definition in their annual report. So I would probably circle back and give you a more accurate answer. But usually it’s average daily users who pay.
John Koetsier:
Interesting because I was thinking wow if they pay every day I’m like whoa I don’t do that in my mobile game I’m like …
Clement Favier:
No, no, definitely not, definitely not. And just to give you an example of this conversion rate of daily paying users, again, daily active users, again, for social casino, it would be in a range of 2.5% to close to 5% for the best in class.
John Koetsier:
Okay, okay, so let’s capture those KPIs just for a second here. One of the ones that you mentioned earlier was MAUs, monthly average users to DAUs, and that was about 17 to one.
Clement Favier:
So yes, the ratio of DAU to MAU, I would say you’re in a very good spot if you are at 25% on at least on social casino, but a range would be 17% to 25%.
John Koetsier:
MAUs, so 25% of your MAUs are DAUs. That’s awesome. And then what was the ratio again for DAUs, daily active users who are payers? Was that about two to 5%?
Clement Favier:
Exactly, 2 to 5% here. Again, this is mostly for social casinos, which is where we have the most public companies. But it gives an indication for sure. It would be very different, obviously, from one genre to the other.
John Koetsier:
Right, right. Okay, so when are you gonna do all the genres?
Clement Favier:
Yes, because we’re liking our public listed companies, right?
John Koetsier:
And Clement is quite like, I don’t have all that kind of time. I have a company to run. But what you’ve done at least is you’ve shown the way that a significant company that’s interested in benchmarking themselves in ways that they can’t do with generally publicly available data from private companies, they can take this approach, they can look for companies that they care about and they can look for that and they can get that data and they can apply it to their own and see how they match up.
Clement Favier:
Exactly, exactly. And I would probably add a little caveat is that those are obviously only indicators to be taken with a grain of salt.
And I believe that probably one of the best benchmarks is your historical data and try to be improving. To that list, you know that’s 100% comparable. You know your scope. So obviously your number one driver should always be better than your previous iteration. But yeah, again, to get a sense of probably where you get the biggest opportunities to improve is definitely a good thing to look at.
John Koetsier:
Wonderful. Clement, thank you so much for sharing this.
Clement Favier:
Thanks so much for having me.
Stay up to date on the latest happenings in digital marketing
