This sponsored post is produced by Jason Seldon, the founder and CEO of P4RC.

P4RC InfographicIn recent years, GamesBeat has published numerous articles about the rising costs of user acquisition and the challenges involved in retaining and monetizing these users. One such article quoted a study, which concluded that on average, players must use an app at least 10 times before making an in-app purchase. The article went on to add that 26 percent of apps are used only once. Aside from just creating a great game that is naturally retentive, which is no easy feat for any developer, a number of tools are available for developers to attempt to overcome these retention challenges.

When used properly, a game’s in-app currency is a powerful tool to incentivize retention. For example, many developers liberally grant hard currency in early game sessions and later run in-game events or promotions that reward players with additional currency as a means of driving retention. Additionally, many employ monetization platforms that reward players with in-app currency in exchange for taking certain marketing actions. The challenge with such strategies, however, is to avoid upsetting the balance of the game’s economy. By providing additional currency through these mechanisms, they may delay the loss of some players, but they may also cannibalize their sales of virtual goods. By inflating the supply side of the economy, they run the risk of increasing retention at the cost of diluting average revenue per daily active user (ARPDAU). So there is a real cost to this form of retention, and finding the right balance is the key.

Another mechanism for retention involves implementing a loyalty program that isn’t tied to the game’s in-app currency. One example is P4RC’s loyalty platform.  Similar to frequent flyer programs that airlines use to build loyalty, P4RC enables players to earn loyalty points for gameplay that can be redeemed for real-world rewards. As retention is often a function of progress toward a goal, P4RC enables players to constantly progress toward a goal of earning rewards that they can use outside the game. As a result, developers have seen significant boosts in player retention, with the likelihood of users playing 10 or more days in a 30-day period increasing by as much as tenfold for games on P4RC’s network.

Regardless of the mechanism used to drive retention, game makers have a clear need to shift focus toward retaining the users they have. By all indications, user acquisition costs will continue to rise for the foreseeable future. As the more prominent publishers and developers continue to outspend smaller competitors and drive up user acquisition costs across the board, developers need to make the most of each user they do acquire in order to maximize player lifetime values (LTVs). This not only provides better margins per user acquired, but it also affords developers the capability to profitably acquire players that were previously out of reach.

Jason Seldon is the founder and CEO of P4RC, a player engagement platform for mobile games. Prior to founding P4RC, Seldon was the founder and CEO of Eye Interactive, a publisher of mobile games for iOS and Android, including top charting titles such as Tap Rocket, Zombie Sam, and Stop Those Fish. Prior to Eye Interactive, Seldon held operational leadership roles with companies such as MGM and Disney.

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