In the olden days, a tweet may have been just 140 characters. But in the shiny new modern world, tweets can be expanded with brief previews of the linked content: videos, images, stories. That’s what Twitter calls a “Twitter Card,” and Twitter announced yesterday that the social network is adding new types and new features, especially for mobile.

Along the way, Twitter is making the app-centric paradigm less siloed and more connected. And giving mobile app developer a major new marketing opportunity.

The new Twitter features include mobile app deep-linking, which enables a Twitter user to click into an app to view content that is linked to from a tweet. That’s a big step, because now content can be shared from within an app to Twitter by one user, then seen on Twitter and viewed within an app again by another user. In a sense, that makes apps more accessible, more connected … more weblike.

But if a user doesn’t have the app, they’ll be given an option to download it, right from within the tweet.

That’s a huge bonus for app developers, as it massively shortcuts the user acquisition funnel. Developers and marketers can now add users directly via Twitter, simply by adding a few lines of code to any content shared from their app to the social network. The catch, of course, is that you have to build an app that is inherently social, which facilitates and even encourages sharing.

“I’m very excited about Twitter Cards,” Craig Palli, a VP at Fiksu, the mobile app marketing platform, said. “Twitter combines expansive global reach and real time intent within its social graph … as people search, explore and generate content within the Twitter ecosystem, it’s an ideal time to identify precisely which consumers could have a high propensity to convert into loyal users, and present them with a contextually-relevant mobile app.”

It’s also a major bonus for apps with existing users, as venture capitalist and Twitter investor Fred Wilson mentioned this morning:

It is particularly helpful for e-commerce apps where sending someone to a mobile web page where they are not logged in pales in comparison to sending them to a mobile app where they are logged in with their payment credentials stored and ready to be used in a transaction.

For many ecommerce and marketplace businesses, this will be a huge help in delivering transactions instead of page views. I am sure there are a host of other application types where getting a logged in user instead of a logged out user will be super helpful.

In addition, Twitter has added new card types for expanded tweets: apps, products, and galleries.

The app card, naturally, showcases information about your app, mainly details from the iOS app store or Google Play; the product card shows an image and description of your product, along with two customizable fields that could include price or ratings; and the gallery card reveals right within the tweet that multiple images are being showcased, not just one.

The product card is massive for e-commerce companies, who can now showcase their products, with critical buying information, right on Twitter. More card types will be coming, Twitter says.

It’s also worth noting that as Twitter builds up inventory of what will be essentially meta-tagged tweets, organized by commercial intent, app connections, and more, it will have very interesting opportunities to aggregate these and start to monetize them — particularly the product cards.

And finally, after significantly angering developers last year who were building on Twitter’s platform with Twitter content, Twitter is extending a massive olive branch to developers who can build on Twitter’s platform with their own content.

Image credit: The Design Work

For part one of the discussion, click here.

Game designers may not care about it, but acquiring users is still one of the most difficult tasks in launching a free-to-play mobile game. The problem is that a new game will compete with 132,000 other active titles on Apple’s iTunes App Store. Advertising can help it stand out, but as ad costs rise, the risks are very real that a company may pay more to get new users than it can generate a return on.

If a company pays $3 each to get 100 users, it would be outstanding if 10 percent of them convert into paying players. To get a return on the advertising outlay, those players have to generate $30 over the lifetime of the game (a stat known as lifetime value). It can’t take forever to get those users, either.

In the real world, the problem is that some companies are paying $8 to acquire a user. And mobile marketing firm Fiksu says that the cost of user acquisition rose 21 percent from November to December. At the Casual Connect Europe event, I moderated a session about the tips and tricks of user acquisition.

It’s no wonder that some companies are searching for alternatives to getting their games discovered. Some of those alternatives are shifty. Tapjoy found that out when Apple cracked down on its incentivized installs in 2011, and many turned to Android as a result. Last year, as Gree entered the U.S. market and bid up the cost of user acquisition dramatically, developers longed to be featured. Gree was accustomed to paying much more — $15 a user and advertising on TV — to get lucrative Japanese players. But in the rest of the world, consumers aren’t yet as crazy about paying for games. Alternatives have to be found, even for the likes of Gree. But the pressure on costs is rising as more brands move into the market without worrying about user acquisition costs.

Our panelists included Jussi Laakkonen (pictured far right), the chief executive of cross-promotion firm Applifier; Stefan Bielau (second from right), a freelance mobile consultant; Erlend Christoffersen (third from right), the head of user acquisition at mobile gamemaker Supercell; Eric Seufert (pictured third from left), who’s in charge of marketing and user acquisition at Helsinki’s Grey Area Labs, the publisher of Shadow Cities; Gilad Rotem (pictured second from left), the head of sales and product for InGaming; and Billy Shipp (pictured far left), the vice president of growth at Iddiction, the creator of the App-o-Day promotion platform.

Here’s an edited transcript of our conversation. They brought home the point that everyone should think about solving the tough problem of user acquisition.

Takahashi: Is there something you want to see the platform owners do to help with discovery? And what are they going to actually fail to do that you’ll have to undertake yourselves in some way?

Laakkonen: Apple and Google have to do social better. People I like, people who know me — why can’t I see recommendations from these people? The App Store already knows all this information. They don’t even need the voice channel. They already know my information. I was so excited when Facebook and Apple became buddies. I thought I’d be able to actually see what my friends were playing. Is there a way for me to say, “Show me what someone’s playing?” No.

Seufert: Just give me an application where, if I touch down in Hamburg or Mexico City, I get some stuff to do here. Based on the location, it could be something like contact data or the relation to my friends.

Schipp: I think it’s not anything the platform operators are going to fail to do. You have to realize that app store search is broken by design. Because the app store’s discovery is broken, because it’s very hard to find apps, these platform operators control the means of disseminating apps. Everyone hopes to get featured by Apple or Google, right? That’s the holy grail. That solves all your user acquisition problems. So how do you get featured by Apple or Google? Well, you visit Apple or Google, and they tell you what direction to take your app in. They want to curate the app stores so they can set the tone of the app store, what kind of apps are being sold. If you’re trying to go against that force, you’re not going to see any return. Maybe if you were to go around it, using services like Jussi’s or other innovative ways of sourcing users. But if you try to go head to head with the dynamics of the app stores, you’re not going to do anything but waste money.

Rotem: I would like to see pay-per-click on the app stores. I don’t know why it hasn’t happened yet. Facebook has recently launched sponsored search.

Takahashi: Can you explain what pay-per-click is?

Rotem: You all know how the ad words work on Google. You search for something, and then you see an ad related to what you searched. It’s not available yet in Google Play or in the App Store, but I’m sure we’ll see it very soon. At least I hope so.

Takahashi: What predictions do you have about user acquisition going forward?

Laakkonen: I’m going to reiterate what I said a few times. I think that there remains a gap with mobile and social. We won’t succeed by stuffing the Facebook news feed with every second story being a sponsored app. We won’t succeed with a pop-up five minutes into a game. We won’t succeed with spam in your gameplay. Authentic, social word-of-mouth referral is the one way that we have. We have a brand, and we will find a way. That will happen. Afterwards, third parties … who knows?

Christofferson: I have a prediction, which is that I hope we’ll see the same kind of established practices in the mobile space that we see in the dev space, when it comes to tracking and transparency and standardization. I’d love to see more standardization, letting us share the work of our user acquisition team, focusing on acquiring the most daily users and figuring out a way to track people, whether it’s user IDs or MAC addresses.

Seufert: I think Jussi’s totally right. The good news is, Supercell already set a precedent. They did that with asynchronous multiplayer. In Clash of Clans, I can join a multiplayer game with my real-life friends. That’s an element of game design that’s not the kind of strategy you can tack on to any game’s development. You have to design a game around that. I think synchronous multiplayer will be the next big thing that iterates on what we consider user acquisition. When you have this compulsion to play with your real-life friends in real time, and it’s free, the reality is that you could bring in 10, 12, 15 users per user acquired. That reduces the cost of the effective CPIs to the point where I can acquire a user for $10 dollars because I know he’ll bring 10 friends in.

Rotem: Obviously, I see a shift in the user acquisition base. It isn’t about CPIs. You hardly see it in other industries or other forms of marketing. We come from online gambling. No one there will pay you to just bring in a person to play the game. They will pay you if that person’s spent money or a certain amount of money. They’ll pay a revenue share. If there’s a risk, it’s completely on the developer side. Somewhere in the middle is forming a partnership between the marketer and the developer.

Schipp: I agree with Eric. It starts with a great product — great product design — to lower your effective cost of install. Some of the things we know about the future marketplace is that there are going to be more devices and there are going to be more users. That’s going to create new fragments in the market as different providers crop up and they each grab a different piece of that market. The ability to then sort through all that data and find the right partners, the ones that actually work and deliver results, is going to become more and more important and more and more challenging. Tools that help people do that are going to be the valuable ones in the future.

Pages: 1 2

Game designers may not care about it, but acquiring users is still one of the most difficult tasks in launching a free-to-play mobile game. The problem is that a new game will compete with 132,000 other active titles on Apple’s iTunes App Store. Advertising can help it stand out, but as ad costs rise, the risks are very real that a company may pay more to get new users than it can generate a return on.

If a company pays $3 each to get 100 users, it would be outstanding if 10 percent of them convert into paying players. To get a return on the advertising outlay, those players have to generate $30 over the lifetime of the game (a stat known as lifetime value). It can’t take forever to get those users, either.

In the real world, the problem is that some companies are paying $8 to acquire a user. And mobile marketing firm Fiksu says that the cost of user acquisition rose 21 percent from November to December. At the Casual Connect Europe event, I moderated a session about the tips and tricks of user acquisition.

It’s no wonder that some companies are searching for alternatives to getting their games discovered. Some of those alternatives are shifty. Tapjoy found that out when Apple cracked down on its incentivized installs in 2011, and many turned to Android as a result. Last year, as Gree entered the U.S. market and bid up the cost of user acquisition dramatically, developers longed to be featured. Gree was accustomed to paying much more — $15 a user and advertising on TV — to get lucrative Japanese players. But in the rest of the world, consumers aren’t yet as crazy about paying for games. Alternatives have to be found, even for the likes of Gree. But the pressure on costs is rising as more brands move into the market without worrying about user acquisition costs.

Our panelists included Jussi Laakkonen (pictured far right), the chief executive of cross-promotion firm Applifier; Stefan Bielau (second from right), a freelance mobile consultant; Erlend Christoffersen (third from right), the head of user acquisition at mobile gamemaker Supercell; Eric Seufert (pictured third from left), who’s in charge of marketing and user acquisition at Helsinki’s Grey Area Labs, the publisher of Shadow Cities; Gilad Rotem (pictured second from left), the head of sales and product for InGaming; and Billy Shipp (pictured far left), the vice president of growth at Iddiction, the creator of the App-o-Day promotion platform.

Here’s an edited transcript of our conversation. They brought home the point that everyone should think about solving the tough problem of user acquisition.

Takahashi: Stefan, can you talk a bit more about some of the history here in user acquisition? What has worked in the past, and what is working now?

Bielau: The old craze was around incentivized installs — pay-per-click spends on mobile advertisement. Nowadays, the market has opened up a few more opportunities. Facebook came around with the App Center. You find a lot more performance-based models, breaking down your acquisition target to a cost per install, or deeper, to cost per acquisition. Those possibilities weren’t available two years ago. A lot has happened to open up the field for user acquisition. Stuff like mobile search engine optimization becomes more and more important due to the fact that the App Store is so crowded. That can still be triggered by some outside factors to improve your ranking position. I would say localization plays more and more into the marketing part. Before you saw games localization just amounting to translation work. Nowadays — you just gave the example of Japan — it’s important to know the local market when it comes to mobile app marketing.

Takahashi: Erlend, you’re fairly new here in user acquisition, with Supercell coming up with a big hit game, Clash of Clans. It almost seems like you guys wouldn’t need to spend money on user acquisition at all.

Christofferson: For Supercell, it’s all about the problem of building a great game. Only when you see that from your retention and engagement metrics that you’ve got in there — that’s when you can start thinking about marketing. We focus on creating engaged users. We believe an engaged user is more likely to tell his friends about our games, and more likely to monetize.

Takahashi: How do you go about choosing things like an ad network?

Christofferson: What’s important for us in choosing a network to work with is user experience and transparency and tracking. User experience and transparency go hand in hand. It’s important for us to know exactly where our games are promoted and how to share that through the user experience. Tracking is important: making sure that we have all the data we need and that it’s reliable. Preferably, we can see it broken down so we can then optimize a formula to find those most highly engaged users.

Takahashi: Jussi, why don’t you talk about paid versus non-paid user acquisition?

Laakkonen: The new way for games coverage, like everyone says, is a friend showing another friend a game. “Hey, you have to play this.” That’s the best way for a consumer to find a game. You want to have that happen, but you need to delve into paid acquisition, which is very different in the social and mobile markets.

The social market on Facebook exploded, all on the back of viral acquisition. Seeing what your friends play, whether it’s spam or whether it’s authentic. Facebook shut down spammy ways for acquiring users. Whereas [with] mobile, you started by taking out your phone and showing your friend.

I think mobile is actually relatively sophisticated nowadays in paid acquisition. There are people who can help you arrange your campaigns. There are supply-side platforms that help mediate those campaigns. The one thing we have not cracked yet in mobile is the social angle. Not the Facebook-style spam that we all hate, and we’re still kind of afraid of. Every time we add an app on Facebook, we’re like, “Will this game spam me?” It’s always a question. But that’s something that still remains to be cracked. Is there a way where I don’t need to pull out my phone, but I’m somehow able to share and compete with my friends? We’re working to revolutionize the way people do that.

Takahashi: Can you talk about Everyplay for us?

Laakkonen: We do videos of game replays that people can share with friends. Seeing the game, actually seeing what the game is, it inspires some emotion. “Hey, I’m having a great time with this. It’s a fantastic game.” What we’re trying to do with Everyplay is to replicate that moment. We record the gameplay as it happens into a video container. You don’t have to think about it. It just happens. Then they can share it. Like if they had a great fight in Clash of Clans or a great race in a racing game, they can share that in their networks. We see that when a share happens on Facebook, 12 percent of the people who see that replay, on average, immediately go and download the game. Twelve percent is a really good when you think about conversion rate.

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

The cost of acquiring loyal users for iPhone and iPad apps shot up by almost a third last month as marketers started the big Christmas season push.

App marketing firm Fiksu tracks the cost of acquiring loyal users, which has ranged from a high of $1.54 in July to a low of $1.06 just in October. The big jump in November came just after four months of steadily decreasing costs.

“The big surge in costs that we saw were the kickoff to the holiday season, leading to a huge increase in marketing spending,” a Fiksu spokesperson told me this morning.

Source: Fiksu

Cost per loyal user index

Previously, app marketers had relied on Apple’s traditional holiday app submission freeze, which limits the number of new applications coming into the store, improving existing apps’ chances of visibility. This year, the spokesperson told me, marketers did not rely on the freeze as much, spending more freely to get up into the coveted top apps lists before the flood of new users.

This year, that flood was 17 million new devices activated on Christmas Day, and being in a top downloads store position will almost guarantee a surge of new organic users in addition to the ones you acquire via marketing.

Another reason for the increased costs? Updated app store marketing rules: ”Unlike last year, when incentivized networks were still part of the mobile app marketing mix, marketers faced the reality of needing to pay more to get more during the competitive 2012 pre-holiday season,” the Fiksu spokesperson said.

Fiksu also released its app store competitive index, which tracks downloads of the top 200 free iPhone apps. Downloads had topped 5.4 million in October — a seven-month high — as the iPhone 5 rollout reached its peak, then slipped 15 percent to 4.57 million in November.

Source: Fiksu

App store competitiveness index

photo credit: Photo Giddy via photopin cc

6waves is a major publisher of third-party Facebook and mobile games. Now the company is parlaying its strong position as a distributor of games by creating a mobile traffic exchange where developers can cross-promote games with 6waves completely free of charge.

The mobile traffic exchange platform, dubbed WaveX, will enable developers to grow the number of downloads for their games without forcing them to spend a lot of money on acquiring new users. Hong Kong-based 6waves has a lot of users for its mobile games. With the WaveX platform, it will promote the games of other developers that are similar to ones that users are already playing.

6waves will not be charging a fee at all, said Jim Ying, senior vice president of publishing at 6waves.

“Developers have been asking us about cross-promotions,” Ying said. “We were going to build a platform anyway and decided to open it up. Ours has no commission. So you can get more users without ponying up the dollars.”

Ying says the biggest challenge facing mobile developers is how to expose their games to relevant players without spending exorbitant amounts on marketing to get new users. With WaveX, 6waves says developers will be able to quickly and easily get access to a high-quality network of players.

“With the launch of WaveX, we look forward to working with an expanded pool of independent developers from around the world to help them grow the global audience of their games,” said Josh Burns, director of products at 6waves.

WaveX is a powerful, yet simple to use product that caters to mobile game developers of all experience levels and games of any size. Cross-promoting players across games is a proven, cost-effective way to expose developers’ games to a larger audience. Best of all, WaveX is free to use. Sign up and begin growing your game right now.

6waves has 40 mobile games in the works between its own internal developers and deals with external teams. Ten have launched so far, and the rest are coming in a matter of weeks.

6waves’ investors include Insight Venture Partners and Nexon. Besides Chartboost, rivals include Tapjoy and Flurry.

“There is a lot of crazy, stupid money being spent now in acquiring mobile users,” Ying said. “Astronomical sums are being spent on mobile advertising. That’s creating a problem for mobile game developers.”

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Apsalar started out with an analytics business and it is gradually adding more services that take advantage of its data mining capabilities. And that’s going to make a lot more money for mobile app makers, the company says.

Today, Apsalar is introducing its “behavioral advertising solution,” called ApEngage. It allows developers to look at a dashboard application and then figure out which users are worth the extra effort and are most likely to spend money on an app by buying virtual goods. Apsalar enables developers to target highly engaged users or big spends and then hit them with tailored marketing messages such as offers for reactivation, completion, or promos. This kind of personalized targeting is important in an age of too many apps.

“We saw a need in the mobile market from our many conversations with customers, and we are excited to be able to offer an intelligent solution for better acquisition and monetization of engaged users with the launch of ApEngage,” says Michael Oiknine, chief executive of Apsalar.  “We strive to continually innovate in order to better help mobile app marketers find the best, most profitable customers for their apps.”

Apsalar already keeps tables 225 million users and records more than 100 billion user events (such as opening an app). It can analyze the data from those users and generate predictions that are useful for marketers or developers. It allows marketers to find users who match the profile of the app equivalent of a Las Vegas high roller. Then it lets them communicate with those users and drive them to become more engaged. The users may spend more money and help to improve the overall monetization for the app.

ApEngage targets only the right users, the company says, or those who have shown a liking for specific types of apps. It also finds users who buy a lot of stuff when they play an app or stay engaged with it for a long time. And the tool allows marketers to target users on a large-scale in real-time, while the users are in the midst of using an app within a larger third-party network of apps.

The company designed ApEngage to let marketers do different types of campaigns. They can acquire new users, hunt for users who have certain characteristics or tastes, or find the ones with the high-purchasing behavior. App marketers can also re-target users who have become inactive and try to entice them to come back.

In the current saturated app market, marketers are all struggling with user engagement. As you can see from the chart at the bottom, as users download more apps, they use each individual one for a shorter period of time. So more and more apps are fighting for a thinner slice of the consumer’s attention. Focusing on mass downloads isn’t enough, particularly as user acquisition costs rise.

“We are excited to be one of Apsalar’s inaugural partners for ApEngage and have a variety of audience segments we wish to test out as part of our user acquisition strategy.  As the first true data driven solution that offers the ability to target the right type of high value users for our apps, Apsalar continues to push the envelope for the mobile advertising industry,” says Christophe Bach, founder & chief executive officer of TextMe.

ApEngage is available today in a private beta test with certain partners. Those include TextMe and Midverse Studios.

Apsalar was founded in 2010 and is based in San Francisco. Investors include Thomvest Ventures, Battery Ventures, and DN Capital. The company has raised $5.8 million and has less than 30 employees.

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It’s also preloads on devices.

That’s a little strange to modern ears, because in some sense it’s reminiscent of the bad old days of crapware: dozens of annoying pre-installed apps on new PCs, placed there simply because a software publisher paid the manufacturer.

Why do we need preloads in this age of virality and social media marketing?

I asked Lars Fjeldsoe-Nielsen, who leads global biz-dev for Dropbox, exactly that question. His answer was both surprising and informative, and made me reconsider some of my opinions on mobile user acquisition.

Fjeldsoe-Nielsen — let’s just call him Lars, shall we — told me that he had to fight internally at Dropbox to even open the topic with carriers and manufacturers.

“Most people were saying we’re doing fine with user growth right now … why do we need this?”

Source: Dropbox

Dropbox is included in Samsung Galaxy 3S onboarding

But Lars persisted, wanting to super-charge user growth acceleration. And the way he did it has added not just phantom users but actual real live recurring users: the holy grail of a freemium service.

“You have to prioritize the partners. And you have to make sure that they commit to you as well,” he said.

Dropbox only worked with partners who were prepared to make Dropbox part of their consumer value proposition … and even part of their marketing. For example, a carrier in the UK highlights Dropbox integration in its in-store displays as one of the key reasons why customers should select its phones.

And that’s the key word: integration.

Dropbox only worked with partners who allowed them to embed the software in the entire solution. That means that instead of an icon on the screen which users may or may not want, understand, or even ever open, Dropbox is fully integrated into the smartphone’s functionality. Photos taken are automatically uploaded to Dropbox, and synced to users’ desktop computers.

“One of the biggest problems is getting your content off all your digital devices,” Lars said in a Mobilebeat 2012 session yesterday. This solves that problem.

In addition, Dropbox signup/signin has been included right into the phone onboarding flow. So, as users are setting up their Android device with a Google identity, Dropbox set-up is right there in the middle.

“This is gold,” said Lars. “You pull out your teeth for that.”

If consumers are prior Dropbox users, Dropbox starts syncing their content to the device immediately … giving users an instant reward for signing in. In addition — and this is part of the value proposition to partners as well as end users — users get a free 50 GB Dropbox account for two years, simply for signing in.

I asked app developer Bryan Kennedy, chief technology officer at Sincerely, about this user acquisition strategy. Referencing his mother (for whom he is chief tech supporter and app installer), he said it was a smart way to access parts of the market:

Source: Dropbox

In-store marketing with Vodafone

“Most non-tech savvy users don’t know how to install apps on their phones and never will. So for Dropbox to have access to those users … that’s an incredible opportunity.”

And it’s working for Dropbox, in spite of some pain, says Lars:

“Working with OEMs (original equipment manufacturers) can be a pain … but if you do it right, it’s definitely worthwhile.”

Dropbox has deals with both carriers and phone manufacturers, included Samsung, of course, HTC, ZTE (a Chinese white-label manufacturer of Android-based phones), Vodafone, T-Mobile, and others.

Naturally, all the deals are on Android. Dropbox hasn’t given up on iOS integration as well, but given iCloud, that may be a pipe dream.

Even so, the dream is pretty good right now for Dropbox.

Image credit: Pixel Embargo / Shutterstock.com

It’s a little scary to be an iPhone developer when you hear about the rising cost of acquiring new users through marketing programs. For much of this year, the distribution channels of mobile games (the traditional means for marketing apps to consumers) have been sold out. That’s causing the cost of marketing through these channels to rise.

That’s in turn is forcing smaller developers such as Ben Vu, the founder of Omaha, Neb.-based SkyVu Entertainment, to spend a lot of their time finding inexpensive ways around the rising cost of user acquisition on iOS. On a panel at our GamesBeat 2012 event, Vu said he was talking to fellow panelist Gabe Leydon, the chief executive of app maker Machine Zone, about the problem.

“I was freaking out,” Vu said.

The problem is tough for makers of free-to-play games, where users download an app for free and purchase virtual goods with real money. If the lifetime value generated by these games is small, then the cost of acquiring new users could very well surpass the amount that developers reap in revenues from users. (That’s not a good thing).

“This mismatch is insane,” Vu said.

Leydon said he has seen the cost of acquiring a user rise from 50 cents at the start of the year to as high as $7 on some occasions. Average rates for acquiring users are statistically lower than that, according to mobile app marketer Fiksu, but there’s no question the trend is making life hard on everyone. For small developers, you have to “do whatever it takes” to get noticed, said Vu, whose company makes the popular Battle Bears game and has 60 million downloads to date.

So far, that means cross-promoting new games by leveraging the audience for existing games and engaging with other developers who are willing to trade the eyeballs for their games for the eyeballs for SkyVu’s games. Launching these cross-promotions are something that Vu himself deals with on a weekly basis. (In fact, it’s why he showed up late to the panel). Chartboost does this in a formal way.

“You have to pay attention to this, down to the hour or the minute,” Vu said.

Steve Peterson, a writer for GamesIndustry International and the moderator of the panel, asked if this was a “catastrophic situation” for game developers on Apple.

A.J. Yeakel, a mobile consultant and former user acquisition expert at Zynga, said he believes the market will see a correction as prices for marketing services eventually drop, because they are unsustainably high now. But Leydon disagreed. He sees lots of “billionaires” coming into the mobile games market that want to promote their branded games at all costs, even if it means they lose money in the beginning. Big Chinese game companies haven’t even entered the market yet.

“The pressure on prices will shoot upward and not slow down until more ad inventory comes online,” Leydon said. “There’s billionaires in the market who want to win. They are willing to spend $7 a download. This is going to be a long, tough fight.”

The good thing is that there is a surplus of inventory on Android smartphones, and this problem doesn’t exist on that platform.

Rob Weber, the cofounder of app marketing and monetization firm W3i, said it is hard to figure out where the top of the market will be in terms of user acquisition costs.

“You can’t predict how the bigger companies will spend,” he said. “But it’s about finding the right volume and the right level of profitability for a game and doing it on a large scale. It’s a huge, full-time job.”

Leydon said that nothing helps reduce the cost of user acquisition like a great game, which will often spread quickly through word of mouth. But even the best and most popular games only hold the top spots of the App Store charts for a matter of weeks. After that, you need a user acquisition strategy to keep the rankings high, Yeakel said.

Leydon said developers have to seek out as many partners as possible to lower their acquisition costs. One of the things that should help reduce costs is the deep integration of Facebook into the App Store, since “like” buttons on apps will help them spread without marketing costs. Twitter has also helped in this respect.

Certain types of games also have a longer life and higher lifetime value, such as Machine Zone’s role-playing games, Leydon said. Weber suggested that Machine Zone launch more casual games, which could snare many more users and feed them into the role-playing games that make more money. Having better social networking promotion would help, too.

“I wish I had that all day long,” Leydon said.

Yeakel said that Mark Pincus, the chief executive of Zynga, makes major point when he brings up a user’s “active social network,” an indicator that counts the number of friends who are actively playing the same game as they are. The higher the number, the more likely the user will stay in the game and spend money in it.

Leydon said he was a fan of a new user acquisition tool from Hook Mobile that searches through a user’s contact list on a phone and finds out which of those users has an iPhone. Rather than spamming everyone on the contact list, the Hook Media solution allows a developer to target known iPhone users.

That’s cool, but Apple has indicated that the unique device identification numbers (UDID) will be phased out over time, making this no longer a valid way to target users. That could make life even more difficult for developers, and no single prevailing solution is in place yet to replace the UDID.

Better branding can help an app stand out and get more users naturally, Vu said. So his company is engaged in licensing the Battle Bears franchise for a possible TV show and line of toys.

“We are working on the core product and the core brand and making it freakin’ awesome,” Vu said.

Apple could affect the state of user acquisition costs on the platform by making changes to it. It acquired Chomp, an app search entity, that could be integrated into the App Store. If it becomes a lot easier to search for the right app, then that will help apps get noticed and lower the cost of acquiring new users. But for now, there is no solution in sight.

“That’s just more things to worry about,” Vu said. “I’m pulling my hair out.”

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Without users, it doesn’t matter how innovative your mobile app or game is. At next week’s GamesBeat 2012 conference in San Francisco, we explore the future of user acquisition with speakers such as Rober Weber, a cofounder of W3i; Gabriel Leydon, the CEO of Machine Zone; Ben Vu, a cofounder and CEO of SkyVu Entertainment; and mobile strategy consultant A.J. Yeakel.

As VentureBeat’s Dean Takahashi put it back in April, “What app makers have to spend to get the attention of Apple device users has risen out of control. That’s a tough fact of life that could make survival hard in the Darwinian mobile app ecosystem. Solving this problem is going to require a lot of innovation and clear thinking. And if it isn’t solved, we’re going to see a number of mobile app companies start to die. If Apple and others in the ecosystem don’t handle it right, it could be a bloodbath for developers.”

This year’s GamesBeat conference will also be co-located with our MobileBeat 2012 conference, where we’ll be exploring how design is the new battleground.

App User Acquisition Today & Tomorrow – Where is it all headed?

The cost to acquire users for mobile games continues to rise. Learn from top experts representing game studios large and small how they are evolving their marketing campaigns to find gamers and how they are optimizing their games to maximize profitability. Key topics include how the social space is impacting discovering of apps now and into the future in light of recent changes by social platforms. We’ll talk about which marketing campaigns have been successful and which campaigns are failing, the tactics that are moving the needle with respect to monetization to improve profitability from user acquisition, the changing methods of user identification and the impact on performance measurement, and how indies are competing with large players to acquire users.

Speakers

Gabriel “Gabe” Leydon is the cofounder and chief executive officer of Machine Zone, Inc., a high growth, free-to-play, mobile, social gaming company. Under Gabriel’s leadership, Machine Zone has created top-grossing hits such as iMob, iMob2, Original Gangstaz, and Global War for iOS devices. Gabriel launched the company (then known as Addmired) in September 2007, joined Y Combinator in the winter of 2008, and is now driving Machine Zone to become the leader in free-to-play mobile games.

A.J. Yeakel is currently a mobile strategy consultant and advisor to companies, including Flurry/Activision Mobile Publishing, Presidio Mobile, and Popover Games. Previously, A.J. served as head of mobile marketing and revenue at Zynga, helping to grow Zynga’s mobile division from 100,000 to over 15 million active daily users. During his time in the mobile group at Zynga, A.J. oversaw 15-plus marketing launches across iOS, Android and HTML5.

Rob Weber cofounded W3i in 2000, growing W3i to be a leader in app user acquisition and monetization. For 42 consecutive quarters, the company has turned a profit and has grown to over 120 employees. For more than a decade, Rob worked to create solutions to increase distribution, drive revenue, and heighten engagement for app developers such as DeNA, Gree, Kabam, PocketGems, and many other indie and public developers. Under Rob’s leadership, W3i recently launched a mobile offer exchange that includes partnerships with leading offer providers.

Ben Vu is the cofounder and CEO of SkyVu Entertainment, a Top 50 mobile game developer with over 17 million downloads of their award-winning Battle Bears mobile game franchise. A recipient of TouchArcade’s Best iPhone Games of the Year and iLounge’s Top 100 Games of the Year, SkyVu’s core 3D action games have reached the top of charts in both paid, free, and top-grossing in over 50 countries.

Moderator

Steve Peterson, the West Coast Editor for GameIndustry International

GamesBeat 2012′s theme is “The Crossover Era.” The game industry as we know it is changing. We’re seeing established companies cross over from one market to another, where once they faced barriers. As companies adapt to change, we are witnessing disruption, change, consolidation, innovation, and the arrival of big money. We’re talking billions of dollars that are at stake.

We want to thank the industry leaders that are supporting GamesBeat 2012: W3i as Platinum Sponsor; King.com as Corporate Sponsor; Flurry and Tapjoy as Gold Sponsors; Greystripe, LifeStreet Media, Ludei and Nokia Developer as Silver Sponsors; and Betable, Game Insight, Gree, Kontagent, Nexage, Paypal, Pontiflex, Swrve, and XYOlogic as Event Sponsors.

GamesBeat 2012 is VentureBeat’s fourth annual conference on disruption in the video game market. This year we’re calling on speakers from the hottest mobile, social, PC, and console companies to debate new ways to stay on pace with changing consumer tastes and platforms. Join 500-plus execs, investors, analysts, entrepreneurs, and press as we explore the gaming industry’s latest trends and newest monetization opportunities. The event takes place July 10-11 in San Francisco, and you can get your tickets here.

Photo via Shutterstock

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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In the past month, what app makers have to spend to get the attention of Apple device users has risen out of control. That’s a tough fact of life that could make survival hard in the Darwinian mobile app ecosystem. Solving this problem is going to require a lot of innovation and clear thinking. And if it isn’t solved, we’re going to see a number of mobile app companies start to die. If Apple and others in the ecosystem don’t handle it right, it could be a bloodbath for developers.

We talked a lot about the consequences of the rising cost of user acquisition at our VentureBeat Mobile Summit 2012 this week at Cavallo Point in Sausalito. Our three session chairs: Gabriel Leydon, chief executive of Machine Zone; Maria Alegre, CEO of Chartboost; and Chris Akhavan (pictured top right), vice president and general manager of strategic partnerships at Tapjoy, drove the discussion about solutions and strategies to deal with the rising costs.

This problem applies to free-to-play games, where companies have to spend money on marketing and advertising to get new users. If they spend more on acquiring users than the lifetime value of those users in terms of future revenues, then the companies will start losing money. The costs have been steadily rising, but the entry of Gree, which pledged to spend $50 million on mobile marketing in the U.S., has pushed those costs over the top. Costs will only get worse this year as companies such as Zynga, Electronic Arts, Gameloft, DeNA, Perfect World, and Tencent battle for mobile market share.

A year ago, the costs were under control because developers like Tapjoy were using low-cost incentivized installs, which rewarded users with virtual goodies for downloading other apps. But Apple shut that down because it led to manipulation of the top 25 charts. Add to that Apple’s crackdown in February on bot-driven third-party marketing services (because they also led to chart manipulation), and costs have trended upward.

Some of the tips are kind of random, and they come from people who have had deep experience in this young market. For instance, it pays to release your app on a Thursday since Apple features apps that appear on that day. Getting featured on Apple’s store is perhaps the best way to get discovered without having to pay anybody a lot of money.

First and foremost, the best way to control your user acquisition costs is to have a great app. Great apps spread naturally via word of mouth, and they are more engaging and easier to monetize, Leydon said. A developer such as Epic Games’ Chair Entertainment has set itself apart by creating the Infinity Blade series of games with outstanding 3D graphics. Chair could keep going down that road since mobile devices such as the new iPad are getting better and better. The foundation for high-quality 3D games is in place, with fast processors, great displays, and tools such as Unity 3D. But better graphics is also a dangerous road that led the console game makers to create teams of 100 people or more working for two years at a time.

With a great game, it isn’t so hard to improve your lifetime value and generate organic downloads. If your lifetime value is high, you don’t care as much about your cost-per-install (CPI) or the cost of each new user.

“CPI is a relative number and should be measured in relation to the LTV of your product,” said Adam Flanders, senior vice president of sales and marketing at Glu Mobile. “If CPI is getting too expensive, the focus needs to move to engagement, retention, and monetization of your product to drive LTV up above CPI costs.”

It is possible, and quite scary, that even great apps could get lost in the App Store, which has a total of 598,154 active apps. Sometimes, great apps need a boost to get noticed. And it helps to have a game that is designed for monetization.

Usually, game designers focus only on making a high-quality app. But it can help to have a user acquisition expert involved in the design of a mobile game. That expert can help design the funnel of activities that lead directly from trying out the game to paying real money for digital bits, or virtual goods, that don’t exist in the real world. And so that expert isn’t flying blind, your app has to be instrumented with analytics, said Greg Canessa, vice president of mobile at Activision Blizzard.

The solutions include moving your apps to Android, where the cost of user acquisition has actually been dropping. Tapjoy took its incentivized installs to Android as well. And while Android’s user count has been on a tear, monetization has been weaker than on iOS. So while Android represents a great release valve on costs, it isn’t a panacea.

Another way developers can bring down costs and bring up installs is through services like FreeAppADay or Iddiction’s App-o-Day. FreeAppADay gets millions of users coming to its site to download an app that has been made free for a day. Iddiction’s Andrej Nabergoj, (pictured middle), argues that a curated list of the best apps will be very appealing to a lot of users. Chartboost, meanwhile, lets developers set up their own networks where they cross-promote games of other developers in a kind of barter system. Alegre said this kind of network can disrupt the ad networks that charge money for this kind of service. FreeMyApps is another app discovery service with its own digital rewards system.

Akhavan said that more intelligent targeting is also essential. But it could get harder now that Apple is doing away with user identities known as UDIDs. That makes it harder to know who your user is and thus to target that user with relevant advertising. There are other ways to target users. Groups are forming to create new identification systems. And apps could access a user’s address book, but they walk a delicate line on privacy when they do so. With the UDID in flux, the state of targeting ads is in flux.

One strategy app makers could use is to publish games for other developers or promote the games of other developers within their own apps. That turns the problem around and helps developers take advantage of high CPIs. Another strategy is to try everything, using multiple promotional networks and going to the trouble of analyzing the return on investment for each one of them. If someone creates an analytics dashboard for managing that activity across networks, it would be quite useful to developers.

Of course, Apple could do a few things to ease the problem, too. It could get rid of its top downloads chart and switch to an engagement chart that ranks apps by the number of daily active users. Those are the apps that have users coming back over and over. Of course, you might see something like Draw Something or Facebook dominate that list. Improving how it surfaces and promotes new content through something better than Genius or Game Center is a must. Apple bought app search firm Chomp, and most observers are expecting that to result in improved, low-cost ways to surface good apps.

In the absence of action from Apple, the middle-layer companies could make a difference. Gree and DeNA have built mobile social networks in Japan that have created a lot of virality and improved engagement among users. They’re launching networks in the U.S. that are attempting to do the same thing, although it may be a while before they really work.

Facebook Mobile, which now has hundreds of millions of users, has come on strong on the social front, enabling users to discover new mobile apps based on the activities of their friends. A lot of that may be through what some users consider to be spam. Just a month ago, Leydon wouldn’t have considered putting Facebook Connect into his games. But Draw Something grew to more than 50 million downloads in less than two months, thanks in no small part to the virality of Facebook Mobile. Twitter is also going to make a lot of impact in mobile promotions this year.

The rising cost of user acquisition is a tough problem. It takes the whole ecosystem to solve it. But even at this point in the growth of the App Store, Leydon says there has never been a better time to make mobile games and apps.

GamesBeat 2012 is VentureBeat’s fourth annual conference on disruption in the video game market. This year we’re calling on speakers from the hottest mobile, social, PC, and console companies to debate new ways to stay on pace with changing consumer tastes and platforms. Join 500+ execs, investors, analysts, entrepreneurs, and press as we explore the gaming industry’s latest trends and newest monetization opportunities. The event takes place July 10-11 in San Francisco, and you can get your early-bird tickets here.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

In the wild world of the app economy, there is an overwhelming concern about the cost of bringing users to apps. Budgets can be in the millions now for marketing an app launch, but execs from Iddiction and Tapjoy said at VentureBeat’s Mobile Summit 2012 today that it doesn’t have to cost that much to bring in new users.

Lead GamesBeat writer Dean Takahashi sat down with Iddiction CEO Andrej Nabergoj and Tapjoy VP Chris Akhavan to talk about user acquisition at the Mobile Summit event. Both Iddiction, which focuses on providing a platform for app discovery, and Tapjoy, which focuses on in-app advertising and discovery, have realized strategies for grabbing users’ attention and pushing them toward deserving apps for less money.

Tapjoy especially has been in the middle of the conversion about user acquisition since Apple banned lucrative pay-per-install apps, which Tapjoy had been pushing, about a year ago. Tapjoy changed some of its strategies to push Android apps instead and created a $5 million Android Fund to help game developers port their apps to Android.

Akhavan said that its Android Fund has been quite successful in helping promote and build a new generation of Android apps. He noted that with Tapjoy behind these small and mid-size players, they are able to grab users for much less than one of the big developers. “We’re figuring out the most cost-effective way to target your audience,” he said.

Iddiction CEO Nabergoj, on the other hand, stressed that his company is helping developers by providing a platform for building apps and giving them analytics. “We’re trying to build an exchange for developers and help expose their apps for free,” Nabergoj said.

Tapjoy’s Akhavan said that while Google has done a good job with app placement, it could do better. In the future, he said, targeting will greatly improve and companies like his will be able to help developers acquire more users.

“In the future, availability with targeting will be more prevalent,” Akhavan said. “You’ll be able to target by gender and be more relevant to target your audience. And of course, privacy will remain an important concern in this.”

Iddiction’s hope for the future is that the mobile industry’s biggest players will have better standards. “This is still a primitive time,” Nabergoj said. “There are not the same opportunities for everyone. Doodle Jump was able to build a massive brand without any marketing, but companies don’t often get to shine like that.”

Mobile Summit 2012 photo: Heather Kelly/VentureBeat

When the company said it had 105,779,710 million registered users on April 14 at its first developer conference, Chirp, in San Francisco, it said it was growing by roughly 300,000 accounts a day. Today, Twitter spokesperson Sean Garrett said the company had 125 million accounts, meaning it’s been growing at an average pace of about 340,000 new registered users a day since Chirp.

Twitter’s chief operating officer, Dick Costolo, said two days ago in New York that the company was seeing 190 million unique visitors a month to Twitter.com, up from 180 million visitors in April. But visitors are different from active users, which is what competitor Facebook tracks. Garrett said the company favored measuring visitors partly because it is moving toward an information consumption model, where it’s less important if a person actually tweets or shares content. That’s in line with Twitter’s advertising model, which will show sponsored tweets whether or not a person is a registered user of the site.

Facebook, by contrast, can only display ads to a person if they’re logged into the social network. That, of course, could change over the next few years as the company has the pieces in place to launch a distributed advertising network if it desires to do so. (The company hasn’t said anything official on that front.)

Facebook has also been engaged in some statistical finagling. It used to report status updates a day, counting about 60 million a day back in February. But with the advent of the new “like” button, it’s begun to prefer tracking total interactions and shares. Facebook users share about 25 billion pieces of content each month, or about 50 per user every month if you assume the service has 500 million active monthly users.

Twitter users, in comparison, post 65 million updates a day or about 2 billion a month.

The company has been stepping up its user on-boarding efforts, doing aggressive A/B testing on its homepage (see below).

Today, the company also launched a series of videos instructing newbies on how to use the service at a YouTube channel: