September 29, 2023

Independent game studios often walk a tightrope: on one side, the thrill of creating a unique gaming experience, and on the other, the precipice of financial ruin. The lifeline in this risky venture? User acquisition.

It’s a beast that, if tamed correctly, can fuel a game’s rise to popularity. Mismanaged, however, it can become an insatiable monster that swallows resources and brings studios to their knees.

Every year I review around 50 independent game studios. This article reveals the five deadly traps I have observed in the world of UA that can ensnare unsuspecting studios, and offers pragmatic, battle-tested strategies to navigate this treacherous terrain.

I’m not going to pull any punches. This is a survival guide for studios that have a game generating decent revenue, a basic UA operation running, but are wrestling to level-up their game’s profitability.

1. The invisible players: Lack of iOS attribution

Many studios think that after Apple’s introduction of App Tracking Transparency (ATT), UA on iOS cannot be attributed at all and that Return on Ad Spend (ROAS) can only be measured by comparing all iOS revenue against spend. That is not true; even with very limited resources, you can get some visibility on UA performance.

The world of UA for independent game studios is a battlefield. But you’re equipped to avoid the traps

First, if you haven’t yet, implement the ATT consent pop-up (according to Appsflyer, only 85% of games ask for consent). It’s free and gives you direct attribution for 20% to 30% of users (who choose to opt-in). You can then simply divide the revenue tracked from these directly attributed users by the opt-in rate to get an orientation of total cohort value. In our games, we found that there is no systematic bias to the opt-in behavior of valuable players.

Second, use SKAdNetwork (SKAN) for basic revenue tracking. SKAN has many drawbacks, but in its simplest form you can configure the conversion values to capture revenue within the first 24 hours after a user’s registration, and then compare this value to the total cohort value calculated in the first step as a correction factor to control for outliers. I would recommend a weekly cohort aggregation for this step.

iOS UA is still harder than it was before, but give it a shot. And if you do, don’t be talked into using “blended ROAS” that counts all your organics against UA.

2. Money-burning frenzy: Desire to allocate “the budget”

UA requires spending money, but spending decisions should be made bottom-up and not top-down. Just because you said you’d like to re-invest 30% of your game’s net revenue into UA doesn’t mean that this particular game has a good opportunity to place the spend profitably.

First, real channel and platform combinations separately. A popular approach for allocating budget between channels is to shift budget from a channel that is performing weaker to one that looks stronger. But pulling budget off Channel A doesn’t mean that there is an actual opportunity for all of that incremental spend on Channel B. It could well be that, beyond a small increase, the incremental users you tap into on Channel B are worse than the ones you currently acquire on Channel A. Instead, evaluate each channel separately.

Second, make Facebook and Google work first. The amount for a campaign to start performing on Facebook is in the low hundreds of US dollars, and in the mid thousands for Google. Like a sniper, you need to aim your budget carefully instead of spraying it across numerous channels.

Especially avoid channels that have large overlap with each other (like many networks) and require large amounts of upfront “learning budget” – at least until you have maxed out Facebook and Google.

3. The false messiah: Unrealistic expectations of UA

“Just spend more” is almost never a solution. If a game’s business case looks bad with small UA spend, it almost always decreases in performance with higher spend. Great UA can amplify a successful game, it won’t turn an underperforming game around (as measured in profit a studio makes from the game).

4. The wolf in sheep’s clothing: Dependence on networks’ built-in conversion measurements

Networks can be devious. They often lay claim already active users, grossly inflating the ROAS they report for your campaigns.

If you are serious about UA for mobile, invest in a good mobile measurement partner (MMP) that allows you to export both attributed cohorts and raw attributions. In our portfolio, we use both Appsflyer and Adjust. While Apple’s past and Google’s future privacy changes reduced the effectiveness of MMP attributions, I would still consider it an absolute must.

5. The puppet master: Uncertainty regarding service providers

Lack of knowledge and control over service providers can make studios feel like puppets on a string.

To cut the strings, take charge of your UA metrics. Don’t let any external company lay claim on organic revenue or allow reporting of only blended ROAS (all revenue divided by UA spend). Don’t believe forecasts that claim they can multiply your spend with the same level of profitability.

“Just spend more” is almost never a solution. If a game’s business case looks bad with small UA spend, it almost always decreases in performance with higher spend

Instead of focusing the conversation on how much is spend or how much net revenue can be achieved, I would recommend to nail your service provider to absolute amounts of profit they generate for you (directly attributed revenue, estimated on iOS, minus corresponding spend). Organic uplift (“k-factor”) exists, but is almost always a dynamic value that decreases over time, and often relatively small.

In the end, the world of UA for independent game studios is a battlefield. But with these insights in your arsenal, you’re equipped to avoid the traps, outmaneuver the pitfalls, and chart a course to successful and profitable user acquisition.

This isn’t just about surviving — it’s about mastering the game, taking control of your destiny, and rising victorious in the fiercely competitive world of mobile gaming. You’ve got this!

Justin Stolzenberg has been working in games since 2002, mostly in performance marketing and monetization roles for free-to-play games. As CPO and co-founder, he works with Phoenix Games’ data science and engineering teams.

Leave a Reply

Your email address will not be published. Required fields are marked *