Leveraging Customer Lifetime Value for user acquisition campaigns

  • 1,602 views
Uploaded on

Learn how to: …

Learn how to:
- track
- compute
- and leverage
Customer Lifetime Value for the user acquisition campaigns of your mobile games.

Featuring industry experts Eric Seufert from Wooga, James Peng from Storm8 and Simon Kendall from adjust by adeven. Get the right users!

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
No Downloads

Views

Total Views
1,602
On Slideshare
0
From Embeds
0
Number of Embeds
9

Actions

Shares
Downloads
55
Comments
0
Likes
11

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide
  • Intro myself

Transcript

  • 1. AppLift.com 1 Leveraging Customer Lifetime Value for mobile user acquisition campaigns AppLift Webinars April 23, 2014
  • 2. AppLift.com 2Leveraging Customer Lifetime Value for user acquisition campaigns About AppLift 300+ Game Publishers The leading mobile games marketing platform 400+ Games 2,000+ Media Partners We are a team of 85+ mobile game enthusiasts We are headquartered in Berlin with offices in San Francisco and Seoul We come from 25+ countries and speak 20+ languages We are backed by Prime Ventures and HitFox Group with USD 20M investment 100% mobile games LTV focus All key markets
  • 3. AppLift.com 3Leveraging Customer Lifetime Value for user acquisition campaigns Our panelists Eric Seufert Head of Marketing, Wooga Eric Seufert is a quantitative marketer with a passion for blending real-world problems with large amounts of data, econometric frameworks, and analytical systems. His professional specialty lies in programmatic statistical methods and predictive forecasting for freemium products. Eric received an undergraduate degree in Finance from the University of Texas at Austin and an MA in Economics from University College London, where he was an Erasmus Mundus scholar. Eric joined Skype immediately out of graduate school and subsequently held marketing and strategy roles at Digital Chocolate and Wooga, where he is now the Head of Marketing. Eric is also the author of Freemium Economics, published by Elsevier in 2014. Originally from Texas, Eric currently lives in Berlin. In his spare time, Eric enjoys traveling and writing.
  • 4. AppLift.com 4Leveraging Customer Lifetime Value for user acquisition campaigns Our panelists James Peng Head of User Acquisition and Monetization, Storm8 James Peng leads global user acquisition and monetization for Storm8's complete portfolio of 40+ titles. Storm8 is a leading mobile social gaming network and developer with more than 50 million monthly active users and 600 million downloads across 300 million devices worldwide. Prior to joining Storm8,James worked at H.I.G. Capital, a $15 billion private equity fund, where he evaluated, structured, and executed leveraged buyouts in partnership with management teams. Prior to that, he worked as an investment banker for Lazard, where he advised on various M&A and restructuring deals.
  • 5. AppLift.com 5Leveraging Customer Lifetime Value for user acquisition campaigns Our panelists Simon Kendall Product Manager, adjust by adeven Simon is adjust’s Product Manager and all rounder technology translator. He assists the CTO, and the sales and technology teams in transforming product feedback and business analysis into product engineering. Simon holds regular technology ‘whiteboard’ sessions to support the sales and account management teams with their product knowledge and trouble shoots complex product requests from clients. Over the past year he has also managed the technical integration of adjust with 200 partners and networks. Simon is bilingual in Swedish and English. He has previously presented at the 2013 Apps Promotions Summit in Berlin on cohort analysis and discussed the anatomy of a metric at the 2014 Winter Nights conference in St Petersburg.
  • 6. AppLift.com 6Leveraging Customer Lifetime Value for user acquisition campaigns Acquiring the right users 1 2 3 4 What is LTV How to track and measure LTV in practice How to leverage LTV for user acquisition campaigns Questions
  • 7. AppLift.com 7AppLift.com 1. What is LTV? What is Customer Lifetime Value? How is LTV defined theoretically? What are its components? Why is it important for game publishers?
  • 8. AppLift.com 8AppLift.com 1.1 What is Customer Lifetime Value? Eric: Conceptually, LTV is discounted expected revenue contributions from a user. Practically, LTV is the price you are willing to pay in order to bring a user into your game, given a set of characteristics of that user. James: LTV is the value that a user brings in, including monetary value (in-app purchases) and additional organic value. Simon: LTV is the total value that a user brings during the period from initial conversion until he/she no longer engages with the app.
  • 9. AppLift.com 9AppLift.com 1.2 How is LTV defined theoretically? 2 conceptual approaches to evaluate LTV: The retention approach – bottom up The monetization approach – top down
  • 10. AppLift.com 10Leveraging Customer Lifetime Value for user acquisition campaigns What is LTV? The retention approach (bottom up) Source: Profitably launching Jelly Splash to #1, a marketing postmortem. GDC 2014, Eric Seufert
  • 11. AppLift.com 11Leveraging Customer Lifetime Value for user acquisition campaigns The retention approach (bottom up) Source: Profitably launching Jelly Splash to #1, a marketing postmortem. GDC 2014, Eric Seufert Eric: 1. Use a retention profile to calculate customers’ lifetime 2. Use ARPDAU as a monetization component of LTV 3. Multiple the two elements
  • 12. AppLift.com 12Leveraging Customer Lifetime Value for user acquisition campaigns The retention approach (bottom up) Source: Profitably launching Jelly Splash to #1, a marketing postmortem. GDC 2014, Eric Seufert Eric: This approach is generally used in a prototyping stage of the game and it is not meant to be very accurate. It gives a rough estimation of LTV. If you have a high LTV you can generally spend more to acquire users and if you have a low LTV – well…you can’t.
  • 13. AppLift.com 13Leveraging Customer Lifetime Value for user acquisition campaigns What is LTV? The monetization approach (top down) Source: Freemium Economics, Eric Seufert
  • 14. AppLift.com 14Leveraging Customer Lifetime Value for user acquisition campaigns The monetization approach (top down) Source: Freemium Economics, Eric Seufert Eric: This is a more practical model compared to the bottom up approach. 1. Break down groups of users that you are targeting by various sets of characteristics (e.g., geography, platform, device). 2. Gather minimal level of historical data about monetization from that specific group. 3. Project it out based on a logarithmic term. This model enables to make a conclusion on how much you are willing to spend to recoup money over a certain amount of time. We generally use 180 days for casual games.
  • 15. AppLift.com 15AppLift.com 1.3 Why is LTV important for game publishers? James: LTV helps games publishers understand the ability to pay a different cost per user from every different channel. The more accurate you are across every single campaign, the more efficiently you can buy and maximize your targeted returns with your targeted volumes. The more precise you are  the more powerful in the marketplace you can be  the more efficiently you can command volumes from every different channel
  • 16. AppLift.com 16AppLift.com 2. How to track and measure LTV in practice How to measure it? How is it computed in practice? How to track post-install events? How much is it to set it up? Which events to track? How relevant are they? What’s the role of cohort analysis in tracking LTV? How to perform cohort segmentation?
  • 17. AppLift.com 17AppLift.com 2.1 How is LTV computed in practice? James: First, you need to have the infrastructure in place to be able to match the different sources of revenue with the devices that they belong to. In practice, I typically track cohort revenues using KPIs (e.g., day 1, day 3, week 1, week 2, week 3, month 1). To calculate the LTV, I take all the history to-date and map a revenue curve for every game.
  • 18. AppLift.com 18AppLift.com 2.1 How is LTV computed in practice? James: Generally LTV curve is similar across most similar sources. If you have a very strong understanding of how a user behaves across one particular game, you can map that across similar channels that you have. If you do not have any information available, you might need to use a proxy, such as a title in the same genre, and apply it on a revenue curve. Otherwise, you will have to use multipliers and use a pre-build estimate.
  • 19. AppLift.com 19AppLift.com 2.1 How is LTV computed in practice? Eric: The biggest mistake that prevents people from getting insights from their data – not splitting up users by cohorts. Looking at users as at a collection of characteristics (the network they are acquired from, the location, the date they were acquired on, etc.) helps to group users into groups that make sense. You should track the cohorts every time. If you don’t, you fall into a trap where you are averaging users from different age groups and comparing information that is not comparable (e.g., users from Basil vs. Norway vs. U.S.).
  • 20. AppLift.com 20AppLift.com 2.2 Tracking post-install events Simon: If you have a good tracking solution (in-house or 3rd party), technical implementation of post-install events tracking should not be hard. The most important and the most time consuming consideration when setting up post-install events tracking should be: What I am trying to capture? What goals do I have? How do I capture the data that is most relevant? While in-app purchases and monetization metrics matter a lot, other metrics (virality and engagement) are very important too and greatly vary from publisher to publisher.
  • 21. AppLift.com 21Leveraging Customer Lifetime Value for user acquisition campaigns Event examples
  • 22. AppLift.com 22AppLift.com 2.2 Tracking post-install events Simon: Events on the previous slide are good guidelines, but are not necessarily applicable to all use cases. Tutorial completion is a very interesting event. A lot of clients are tracking this event. Lots of clients are also going further than that – specifying level 1 completion, level 3 completion. When tracking a lot of different KPIs, it’s crucial to remember what is the central goal in tracking, what is the core metric and parameter metric.
  • 23. AppLift.com 23AppLift.com 2.2 Tracking post-install events Simon: While parameter metrics are nice to have in the background, ultimately there should be a couple of core metrics. E.g., if you need to grow your market share – focus on retention; if you need to get your money back ASAP – focus on the purchases.
  • 24. AppLift.com 24AppLift.com 2.3 What’s the role of cohort analysis in tracking LTV? Simon: Cohort analysis takes every single metric that you might want to calculate and gives you a quicker, clearer feedback. E. g., an install date cohort: group the incoming users by the day on which they install. This gives an immediate clear feedback on how users are behaving right after the install compared to how previous cohorts might have behaved.
  • 25. AppLift.com 25Leveraging Customer Lifetime Value for user acquisition campaigns Cohort analysis Erase interference and track comparable KPIs Source: Beyond the Install, APS Berlin 2013, Simon Kendall
  • 26. AppLift.com 26AppLift.com 2.3 What’s the role of cohort analysis in tracking LTV? Eric: If you target your market, you don’t throw your budget on an ad network without at least some parameters attached to it. If you are not collecting data and you are not segmenting around various characteristics, there is no way that you can do marketing.
  • 27. AppLift.com 27AppLift.com 2.3 What’s the role of cohort analysis in tracking LTV? Eric: The obvious examples of cohorts/segments are location and device: bid a different amount for a U.S. iPhone user and for a German Samsung Android user. More specific examples of cohorts: phone model, network from which users were acquired, the type of ad, specific events (holidays) during which users were acquired.
  • 28. AppLift.com 28AppLift.com 3. How to leverage LTV for user acquisition campaigns? Why should game publishers leverage their LTV data? Which LTV approach is best for user acquisition purposes? What hinders game publishers from using LTV for campaign optimization? Does it require a lot of internal resources? How do the game genre and features come into play?
  • 29. AppLift.com 29AppLift.com 3.2 Which LTV approach is best for user acquisition purposes? There are 2 general approaches for LTV: 1. Predicting what’s the LTV, the number in dollars of the users that you acquire. 2. Looking at post install events (proxies) and compare which ones perform better than others.
  • 30. AppLift.com 30AppLift.com 3.2 Which LTV approach is best for user acquisition purposes? James: In practice you need to use both approaches, but it also depends on how much data and time you have. When you are starting fresh, you need to use predictive analytics to forecast without any data at hand. If you are fortunate to have other title that you are marketing and have multiple data behind it, you can quite accurately estimate users’ value curve. Thus, you can leverage the data you have and insights you have from other titles.
  • 31. AppLift.com 31AppLift.com 3.2 Which LTV approach is best for user acquisition purposes? Eric: If you set up a model to forecast based on a minimum level of data (2-3 days), you need to continuously update this model as you accumulate more data. LTV prediction made up on 3 days data will change on the day 5 or 6, so you need to be able to accommodate new data sets.
  • 32. AppLift.com 32AppLift.com 3.2 Which LTV approach is best for user acquisition purposes? Eric: Getting back to ‘bottom up’ approach – there is no way to forecast LTV based on some minimum set of data. Even if it has been an internal launch with 30 people, it is not valid data. I like to have at least a thousand data points before doing any modelling.
  • 33. AppLift.com 33AppLift.com 3.2 Which LTV approach is best for user acquisition purposes? Eric: You have to also weight the uncertainty against the money you are getting. If you are not doing aggressive marketing because you are building up a dataset, then you are not acquiring users. There is some level of uncertainty you have to be comfortable with, in order to be aggressive enough in marketing a game that you believe in.
  • 34. AppLift.com 34AppLift.com 3.3 What hinders game publishers from using LTV for campaign optimization? James: It’s difficult to understand the true LTV: game changes, the channels that you are buying keep changing as well (they are varying composition, keep swapping up publishers in and out). Even more difficult part is engineering behind it. It can be as hard as a home grown solution or as straightforward as a 3rd party solution (e.g., game analytics), but definitely engineering is the biggest problem.
  • 35. AppLift.com 35AppLift.com 3.4 How do the game genre and features come into play? Eric: The game genre doesn’t fundamentally change the concept of LTV or how it is used in marketing. However, the genre and the appeal of the genre and total addressable market affect aggregate levels of profit and your ability in the market.
  • 36. AppLift.com 36AppLift.com 3.4 How do the game genre and features come into play? Eric: That can be teased out in a soft launch, but if you wait too long to make a determination, then you are not being strategic. That’s why LTV modelling without any data comes into play. You need to make corporate level decisions about the game in terms of how much you will market it, given a total estimated addressable market and the opportunity cots of building that game.
  • 37. AppLift.com 37AppLift.com 3.4 How do the game genre and features come into play? Eric: Marketing works from very early stages of prototyping. You need to estimate early on how big the market could be, how this game will monetize, what size opportunities you can achieve. Genre doesn’t necessarily drive the LTV, but your ‘guestimation’ of LTV drives how you should approach the development.
  • 38. AppLift.com 38AppLift.com Berlin | Seoul | San Francisco Questions?
  • 39. AppLift.com 39AppLift.com Is it possible to track customized events or should you track standard events? Simon: With a good infrastructure it’s always possible to track whatever you want. There is a standard set of events that we see very commonly, that would be normal solutions (cited in slide 21). You do have to look at your specific model, your specific business, goals and then in such a way all events become custom.
  • 40. AppLift.com 40AppLift.com How does the fact that you do marketing and user acquisition affect LTV within your game? (1) Eric: Users are finite resources that you are trying to acquire to your game. As you have acquired more, the remaining ones become more expensive because they are more scarce. The user that you have to be the most aggressive about acquiring will be less interested in your game, monetize worse, provide less vitality. You can’t compare the LTV of one cohort where you are running low volume campaigns against another cohort where you are running high volume campaigns. These are two separate, not comparable things.
  • 41. AppLift.com 41AppLift.com How does the fact that you do marketing and user acquisition affect LTV within your game? (2) James: If you are buying a lot of installs, this can affect your average user value. If you are doing a lot of marketing and increasing your visibility, then you can get exposure to different segments of users. You can get on top of rankings and get a general pool of users that find the game because it’s on the chart.
  • 42. AppLift.com 42AppLift.com What are the biggest challenges in future developments lying ahead of LTV and how do you plan on addressing them? (1) James: Predicting and adapting LTV is a continuous struggle. As developers and publishers we need to continue changing the definition of LTV – products change and market changes (internal and external factors).
  • 43. AppLift.com 43AppLift.com What are the biggest challenges in future developments lying ahead of LTV and how do you plan on addressing them? (2) Eric: LTV has been in academic research for 30 years. Conceptually it’s not changing, it’s fundamental. But as games become more mainstream, trackability could be a challenge. It will be challenging to put a price on the individual download which was inspired by a billboard.
  • 44. AppLift.com 44AppLift.com Berlin | Seoul | San Francisco Contact Thomas Sommer Content Marketing tso@applift.com Eric Seufert Head of Marketing eric.seufert@wooga.net James Peng Head of UA & Monetization jpeng@storm8.com Simon Kendall Product Manager simon@adjust.com
  • 45. AppLift.com 45Leveraging Customer Lifetime Value for user acquisition campaigns Thanks for attending! Download this presentation, our case study… on: www.applift.com/INSIGHTS.html For more tips on global user acquisition, global expansion etc. get in touch! info@applift.com
  • 46. AppLift.com 46AppLift.com Berlin | Seoul | San Francisco Thank you!