I’ve been in the video game industry for over 23 years, working on the marketing and publishing side. I got my start way back in the industry at Microsoft on the original Xbox, and went on to work with Sega, Ayzenberg, ArenaNet, Amazon Game Studios, Blizzard and most recently, FoxNext. I’m also the founder of AListDaily and who Eric Ayzenberg affectionately calls “the architect.”
Over the course of my career, I’ve become fascinated with KPI measurement. Running mobile game publishing for the last four years has exposed me to a corporate focus and unequaled value of “short-term” metrics—the almighty return on advertising spend (ROAS), with user acquisition (UA) being completely judged on one simple metric: ROI. Did this ad spend against this cohort result in profit? If so, spend more. If not, discontinue spend.
Growing up professionally in the early days of video game marketing, my roots are in brand marketing. Other than sales, “long term metrics were really all we had. Impressions, share of voice, brand affinity and price elasticity were all highly valued back then by my bosses.
I recently read a study conducted by the Institute of Practitioners in Advertising (IPA) that helped ground me in how to balance the long and short of marketing.
I’m going to share why marketers need to fight for long term metric acceptance and value from management as it’s the only way games-as-a-service and free to play games have a chance to last years and deliver on the expectations of long-term live support.
The State Of KPI Measurement In Mobile Games Publishing
I’ve noticed a trend of gaming companies being enamored with purely attributable marketing spend. By that, I mean spend a dollar and see exactly how much revenue that dollar generates to your company.
This is a very common practice in the mobile games industry, where, as of right now, you can do this in your UA paid media spending on mobile. You do that through technology, which is basically code that goes into your ads that uses the unique identifier of the person viewing the mobile IDFA to connect all the way through the funnel of that person seeing your ad, clicking it, going to your app store, installing your app, playing your app and eventually, hopefully spending money in your app.
There is a data breadcrumb trail that will go all the way back up. And that is empowering to UA teams because they can then do cohort analysis, namely splice that data in many different ways. For example, they can look at people they brought in at a particular time, people that they brought in under a specific piece of creative, people that come in from Facebook versus Google and people that are on iOS versus Android. And they can make very calculated decisions on how much they are willing to spend to get other people like those different groups.
What this has done to senior level folks running game companies in the mobile gaming industry is put them in the mindset that all marketing should be measured this way. That is extremely challenging because the attribution technology and the data sources break when you get into other forms of marketing.
A very easy example of that would be if you run a television ad, there is no way to know somebody watched the television ad and then installed and played your game and then whether or not that is a valuable player or not a valuable player. It’s disconnected.
Where Short Term ROI Focus Falls Short
We need to be better as marketers to provide evidence where possible to encourage management that not all marketing should be completely short term ROI focused, and that there is value in things like brand spending.
If we only focus on purely attributable ROI measured marketing spend, you basically will never do anything for the long term value of the game. As a result, branding gets shoved to the side and is ignored. That is a short term win with potential for a long term catastrophe.
A lot of video games nowadays have extremely long lives, like World of Warcraft is now in its 17th year. If World of Warcraft was launched on iOS 17 years ago on Apple, and Blizzard decided that they were only going to look at ROAS in their UA media spends, I would challenge the notion that it would have ever lasted 17 years because it was not building the brand. It was only looking for new players at the top of the funnel that had some evidence that they could spend.
Short Term Marketing’s Impact On Brand Perception And Price Sensitivity
What will end up happening is if you’re only looking at ROI on a particular media UA spend, it will force your UA team and the team responsible for building the creative to make decisions that are not based on long term value.
So let’s say we’re running the marketing for a mobile game and the mobile game is a new IP, it’s not a license and nobody’s really heard of it. It’s also in a genre that’s really hot right now. Let’s say when Candy Crush came out, you think you have a spin on the match-three category and so you create a game that’s called Gem Crush instead of Candy Crush. So what you’re doing is capitalizing on someone else who has built momentum without trying to build any resonance or affiliation with your own version of that. You will probably see early indications of great success. You can make advertisements that look similar to Candy Crush advertisements. And you will probably get a great deal of people who will be interested, click and download the game, plus maybe spend a little bit of money early on.
And maybe that’s successful. But what will happen over time is that genre will lose some of its steam. People have seen it. There have been lots of competitors that enter the market. You’re not the only Candy Crush, type match-three game. And there will be somebody who maybe puts on the license that people have heard of. So now, instead of just Candy Crush and Gem Crush, which is your game, there is a Frozen-themed match-three game from Disney.
Guess what? That game has brand equity. It has awareness and the downstream effect of brand equity and awareness, while not attributable, would be realized by the marketing team marketing this match-three Frozen game. They will be able to come out of the gate and have greatly reduced cost per installation and cost per impression (CPM) that will allow them to go at a larger scale than you and probably will bring in more loyal customers because there’s a fondness and affiliation, a familiarity with the Frozen franchise. You will have missed your ability to build a long term business because you don’t have that same affiliation and brand affection. The switching costs between the game you’re marketing, Gem Crush, is very low. Players have not built an emotional connection to your brand. They tried it because it was the new hot thing and they’re just as easily swayed by going back to the originator, either Candy Crush or something more familiar, which is the Disney brand.
That’s the long term effect, which is also related to price sensitivity. One of the best case studies of price sensitivity is the mobile device business. There are two big players— Apple with the iPhone and Samsung with the Galaxy. Why is it that Apple is able to charge 50 percent more for a device that may not be quite as powerful as the similar model from Samsung? It’s only one thing: the brand building, brand affiliation and brand equity that they’ve created for that over time.
You may be able to build a profitable short term business if you’re just looking at ROI in the short term window. You may not be able to right the ship if you just use that exclusively as your only means of marketing.
How To Balance The Short And Long Of Marketing
To balance the short and long of marketing, you must be more evidence-driven in the non-attributable marketing spending that you’re doing.
What I think is lazy is when marketers go in front of their boss and say, “But what about brand spend? It’s important for the long term business health of our game.” And the boss turns to them and says, well, can you prove that? And you throw your hands up and you say, well, I can’t show a directly attributable ROI on brand spend, that’s impossible.
That’s lazy. Classically trained packaged goods marketers that never have been forced into this new world of data driven marketing need to adapt and try to put the breadcrumbs together.
While it’s really difficult to run a television spot and then immediately go measure how many new games you sold from that television spot, it isn’t impossible to run the television spot and then look at the cause or correlation into another metric that isn’t completely all the way down the funnel that is more attributable.
Isolate one variable that has highly correlated effect and then go the next step down, another variable that is proven by that prior one in a highly correlated effect, and then further and further getting you to some amount of certainty that there is evidence to whatever the most important metric that you’re trying to drive—whether that’s profitable installs or if that’s retention in your game.
Those metrics are measuring different things, but that’s what needs to happen to justify brand spending, rather than just giving up and saying, “well, I think it worked, our revenues are up.” This bread crumb process can then be used as evidence and justification for further brand spends down the line. If you build this case you can then start a proposed spend pitch with, “we have evidence that our TV brand spend on average reduce cost per install by 20%”
Don’t ignore what data can provide, embrace it and try to come up with as much evidence as possible to get close to attribution. It isn’t going to be perfect because there is not the same sort of attribution available for outdoor billboards, for your public relations efforts or running a cool sizzle trailer on YouTube. But there are data points that can be measured.