Is Value Optimization a Game Worth Playing?
Get more from your ads by finding the mobile gamers who are most likely to spend more.
CONTENTS
Building a great game is no longer enough in today’s increasingly competitive mobile market. With millions of apps available in app stores and ever-rising user expectations, competition for people’s attention is fierce. Fewer players are engaging with new gaming apps, and when they do, spending less time playing in each. That means less people are viewing ads and making in-app purchases organically in any one game, impacting player retention and profitability over time.
Fortunately, as more gaming advertisers leverage data to measure and optimize revenue, they’re finding that moving beyond installs and toward maximizing value is crucial to increasing their return on ad spend over time. To help gaming app marketers overcome this monetization challenge, we wanted to understand the best way to optimize and scale value-based campaign delivery on Facebook, Instagram and Audience Network.
Facebook IQ conducted a series of meta-analyses, comparing the performance of mobile app install campaign objectives optimizing for mobile app installs versus app events such as the purchase app event. Our first two meta-analyses aimed to determine which optimization goal would perform most effectively by looking at the campaign 28-day return on ad spend (ROAS) with a focus on high-value paying players across around 150 gaming apps globally from September to October 2017 and then from November 2017 to February 2018. While our latest meta-analysis focused on unearthing which campaign parameters would increase the campaign performance, by comparing 30 lift tests, 34 split tests and over 2500 advertising campaigns globally from October 2017 to January 2018.
We discovered that to overcome the overall monetization challenge, gaming advertisers must focus on finding the right people—the ones who will not only use these apps but also make purchases in these apps over time.
Know your players’ value.
In gaming, it’s all about the paying users: the few and mighty. A separate joint study from Appsflyer and Facebook found that the average mobile gamer spends $1.70 during a 90-day period. But when isolating paying players, the number jumps by more than 40x. Although less than 4% of players make in-app purchases, the players who do make purchases are extremely valuable because once active in a game, their spending continues to increase. For example, paying gamers in the United States spend, on average, $20 by day 7, going up to $49.33 by day 90.1
PAYING GAMERS ARE MOST VALUABLE BECAUSE THEY KEEP ON SPENDING OVER TIME
Lifetime Value of Average Paying Gamer over a 90-day period (USD)2
So, how do you attract the right players for your game?
Shift from volume to value.
The Facebook ad auction is a system that determines which ads to show a person in order to maximize value for both audience and advertiser.
Mobile gaming app advertisers can choose from a mix of three different re-engagement objectives and optimization goals to deliver their ads to their audiences and potential players:
- Mobile App Install (MAI) ads, which enable advertisers to get more people to install and open their apps;
- App Event Optimization (AEO), which enables advertisers to deliver ads to people who are more likely to take valuable actions within their apps;
- Value Optimization (VO), which enables advertisers to deliver ads to people who are likely to spend more in the apps.
For marketers, understanding the differences between AEO and VO is crucial to deciding ad spend allocation and getting the true value of their spend.
Because AEO is optimized to deliver ads to people who are more likely to make a purchase, the cost to acquire these players is lower when compared to VO, which is optimized on the predicted in-app purchase amount—when comparing campaigns with equivalent ROAS optimized for in-app purchases. Simply put, AEO finds the players who will spend in a game, while VO finds the ones who would spend the most in that same game. In fact, the average revenue per paying player generated when using VO is higher than the one with AEO for most of the gaming apps studied.3 Not only that, but our study showed that campaigns with VO that reached over 5 million people on Facebook would drive higher ROAS.4
Ultimately, the Facebook ad auction system will deliver optimized value to advertisers, but choosing the wrong campaign objective risks attracting the wrong audience, which will lead to higher cost per acquisition. The most effective way of spending a game’s marketing budget is to use the right campaign objective for the right type of players.
Maximize value-based delivery.
Different campaign objectives can be used strategically over time, following the gaming app lifecycle and its profitability curve.
TARGETING AND OPTIMIZING WITH FACEBOOK ALONG THE GAME LIFECYCLE
Timing matters—and so does a game’s genre and monetization strategy. By design, not all mobile app games need to attract the high-value players to be profitable.
There are a couple of ways to determine which strategy is best for your gaming app:
Typically, games that require players to spend money to move ahead are more appealing to high-value players, such as simulation games and slot games. For this player segment, gaming companies may consider heavier investment in VO as a campaign objective to achieve higher ROAS.
SLOTS AND SIMULATION GAMES DRIVE A HIGHER ROAS WITH A HIGHER VO/MAI AD SPEND.4
Some games, such as action games, role-playing games and match-three games, allow players to move ahead in the game whether or not they make in-app purchases. In such cases, game marketers would focus on attracting more players regardless of how much they spend in the game—thus, a heavier investment on AEO over VO would achieve higher ROAS.5
ACTION, ROLE-PLAYING AND MATCH-THREE GAMES DRIVE A HIGHER ROAS WITH A HIGHER AEO/MAI AD SPEND.6
VO helps marketers acquire higher-value players, while AEO attracts a bigger volume of paying players. Still, both should be used as complementary products, with advertisers spending the optimal mix of budget across VO, AEO and MAI depending on their gaming app life stage, genre and monetization strategy. It is to note that our study also highlighted that campaigns using placement optimization with VO—thus serving the ad to Audience Network—drove higher ROAS.7
To learn more, download the full report:
What it means for marketers
Choose the campaign optimization objective that aligns to your business objectives.
Consider your game's genre, life stage and monetization strategy before opting for Mobile App Ads Installs,App Event Optimization and/or Value Optimization. Check out the PlayStudios success story on how they’ve effectively used VO for their mobile gaming app.
Find your optimal campaign objective investment mix.
Optimize your campaign ROAS by conducting multi-cell lift test. Check out the Test and Learn page for more details on how to run ads optimization experiments.
Measure mobile gamers’ lifetime value.
Lifetime value (LTV) is the overall revenue a business generates from an average user throughout his or her time using an app. It is the cornerstone of app marketing as it informs marketers on how much they can spend to acquire a user and still remain profitable. The only way to achieve this is to rely on data, granular measurement and actionable analytics. Learn more about Facebook LTV measurement solutions and how to get started.
