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Playing the ROI Game: How Gaming Advertisers Are Winning a $150 Billion+ Market

By Elizabeth Lauer-Lopez February 27, 2020

According to TechCrunch, by the end of 2019, the global gaming market was estimated to be worth $152 billion—with 45% of that, $65.5 billion, coming directly from mobile games. Investors continue to buy in, too, with over $9 billion in investments. EY.com notes that “total funding in gaming firms over the last 18 months has exceeded the amount invested over the previous five years.” Talk about great ROI! 

If the industry’s so hot right now, how are global gaming companies tracking their success? In the gaming realm, you hear a lot about LTV vs. ROAS, but is one more important to track than the other? Which one should gaming advertisers be focused on for optimizing their campaigns? 

How can you ensure your calculations are accurate?

The challenge of measuring success

Taking a step back, how can marketers actually calculate what their target ROAS should be? Can you calculate ROAS at the publisher level? Should you be looking at ROAS on a cohort basis?  

Although many veteran gaming marketers in the mobile industry have had great success with existing ROAS tracking methods, the technology and methods themselves have evolved over the last couple of years. Marketers have had to find new and better ways to get reliable calculations.

What’s in a game? The three main gaming genres

In devising the best method possible for measuring gaming ROI, it helps to analyze the business model and goal of the different types of games. Let’s take a look at the main gaming genres.

First, you have hyper-casual, highly addictive, lightweight games with simple mechanics.

In this type of game, user sessions are short and LTV is low. Therefore, it’s important for marketers to have leading indicators they can track within the first couple hours of a game launching. 

Given that cohorts are measured on a daily basis, there are other metrics marketers might need to use as leading indicators immediately versus relying on ROAS—for example, the number of installs and the CPI or eCPI target. Given that publishers of hyper-casual games produce multiple apps each month, retention isn’t the key goal until they can quickly identify a successful game to put their marketing dollars against. 

What is the main goal here? Installs.

And they’re getting those in spades. In Q4 2019, hyper-casual games grabbed 10 out of the 15 slots for top downloads. Their business model is to monetize through in-app advertisements and cross-app promotion.

Advertisers for these gaming companies need their marketing dashboard to be able to provide a ROAS calculation based on revenue from served ads versus the traditional in-app purchase. A technical challenge to overcome is for your technology partners to be able to process the extremely low revenue increments that are standard to this business model.

The other extreme is the hardcore games that involve a lot of strategy—these are what most self-proclaimed “non-gamers” would consider “gaming”.

With longer game production time and user sessions, user LTV and retention can be among the highest. But, this gaming experience is generally for a small number of big spenders. 

With longer sessions, retention, being able to see multiple cohort periods around spend, and your custom metrics become very relevant leading indicators of success or failure. Having a ROAS-centric benchmark becomes essential to tracking success and projecting your game’s break-even point within your marketing dashboard. 

Serving ads within hardcore games has become a more accepted practice. If your ROAS calculation doesn’t combine in-app purchase revenue with revenue generated from serving in-app ads, then you should update it using a provider that offers this as a solution out of the box.

It’s essential to understand how users are generating revenue for your business and which sources are driving early whales into your game. 

Similar to eCommerce, the gaming industry goal is to find lookalikes that continue to grow revenue. This also opens an entirely new revenue stream for hardcore games to creatively explore with. For this business strategy, an LTV model is also a must.

Finally, there are casual and midcore games.

These game types strikes the balance between “hyper-casual” and “hardcore.” That said, consider strategies for this group that are closer to “hardcore.” Why? Because more time goes into the app development strategy. And, like all apps, the goal is to blow up and provide a great return. At this point, LTV may be a stretch goal or very simplistic until a game proves its worth and is on target to the break-even point. 

Overall, calculating ROAS at the most granular level possible will help you find pockets of optimizations within your campaign for a particular media channel. These will inform how to shift your budget to increase your potential for greater ROAS results/outcomes and gain an edge in a very competitive landscape.

Ad campaign optimization tactics for gaming advertisers

Eric Seifert’s Mobile Dev Memo’s guide to mobile marketing notes that a ROAS-centric campaign optimization strategy is essential to have in order to understand how cohorts deliver ROAS overtime. He notes that identifying what your ROAS target should be is “similar to mapping an LTV curve onto cohort performance, but the difference is that the specific value of cumulative revenue delivered by a cohort isn’t important, but rather the relative value of that revenue to acquisition costs.” 

So, how are you tracking acquisition costs and the return on your investment or ad spend? Is this still a manual process for you? Is your current method of collecting spend data and matching it to your attribution data on a cohort-basis efficient? Or, is this prohibiting you from launching campaigns with new partners or scaling in new markets effectively? 

A long-standing Singular customer, DGN, leverages Singular to aggregate, standardize, and analyze their campaign analytics across all of their apps and 10+ media sources in a single platform. Singular empowers the team to expose insights, such as publisher level ROI, and ultimately enable faster and smarter optimizations. You can read more about DGN’s success story.

The well-known global gaming company, Nexon, is able to reach their growth goals because Singular helps them save time in a number of ways. A big one is that Singular can “slice and dice, and stack rank what’s important to us to see what’s giving us the highest ROI”, says Warren Woodward. Listen to some of the benefits from Nexon’s Executive Director of User Acquisition.

Try Singular

Looking to up your gaming? Singular helps mobile marketers across the globe automatically bring together their marketing costs from all sources, and match it daily to the attribution source that drove a user to install and a later perform a revenue action within your app.

All this can be done according to the ROAS and ROI cohort length you need to monitor to track towards your business goals. This allows you to spend more time optimizing your campaigns versus logging into platforms to collect the data. What can non-gamers learn from this? Where does your business align with the key goals from our different gaming segments?

Singular has success experts that support customers such as Warby Parker, Twitter, DraftKings, Getaround, and Earnin. We welcome the opportunity to talk to you about how you can measure the success of your mobile marketing campaigns more effectively.

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