Secret Weapons that Revolutionize In-App Purchases

All wars are fought for money,” said Socrates nearly 2,500 years ago.

Though he likely wasn’t referring to mobile gaming, this is a case of art imitating life.
In fact, two of the highest-grossing mobile games today are war-based Freemium games that make millions of dollars each day.

Games Daily revenue
Source: Dataviz http://dadaviz.com/i/4249

These games are free to download, but (many) users shell out (a lot of) cash for in-app purchases (IAP), like Clash of Clan’s “gems,” which are then used to buy resources or finish upgrades, or “pay to not wait” model which allows users advance through the game that is the current object of their obsession, or pay to unlock stages or other game options.

In-App Purchases Expected to Generate Record Revenues in 2017

According to Statista, In-app purchase revenues will reach $36.9 billion by 2017.

In App Purchases Expected to Generate Record Revenues in 2017 (source: statista.com)

Compared to the total revenue generated by apps in the marketplace, IAP revenue will comprise 48.2% of the whole in 2017.
A report by eMarketer shows that in the US alone, in-app purchases in mobile games generate nearly $2 billion.

IAP is big money and has big potential. And the gaming companies that unlock the secrets of dominating the IAP game, will dominate their vertical (and possibly hire an Oscar winner to star in a SuperBowl commercial).

IAP Arsenal: Understand your Whales’ Behavior

To learn a lesson from Supercell, the company behind Clash of Clans, is to understand the importance of creating a good experience for the freemium user. Millions of engaged players created a sort of alternate reality surrounding the game, developing social groups (clans) with websites, recruitment letters, and hierarchies.

Just like any other app or website, in the world of gaming, the key to getting the players hooked is by constantly analyzing Whales’  behavior, understanding their motivation, what triggers the First Time Deposit (FTD) and more importantly, what provokes the following In-App Purchases.

Behavioral analysis relies on querying tons of event data that is generated by all tracked actions of players, to get answers to complex questions, like:

When to pop the next best offer and what is the optimal time/stage in the game should it pop? By analyzing players behavioral profile, can optimize the next best offer to trigger IAP for each segment of players.

What is the path whales follow between First Time Deposit (FTD) towards the 2nd (STD)? With behavioral path analysis, such complex questions are answered quickly. Behavioral path analysis would also relate to the time between the steps. Did it happen in the same session?

What is the most followed path that led to a certain deposit sum? How many levels did the player pass before, how many spins, how many mini-games, how much time in each level and so on? This is how complex the behavioral questions can be, but answered easily when equipped with behavioral analytics along with a behavioral intuitive query language that can provide results instantly.

Cohort analysis is used to analyze user behavior over time and reveal behavioral patterns that lead to IAP. Then, optimizing the path for more conversions is straight-forward and effective.

For example, if free users who play in the middle of the night are monitored making IAPs during the next business day, you may want to schedule a push notification for that moment of truth.

If you find that a certain user type is more likely to make an IAP after inviting friends to the app, create more opportunities for them to share socially earlier on.

Or, perhaps, if you find that users who make their first IAP later than day 10 have a substantially higher LTV, consider reducing IAP friction in the first week.

Reverse Cohort analysis is extremely effective in relation to IAP. Analysis starts from the goal action of deposit, then analyzing backwards the events that led to it. Were there any previous deposits? Or losses? How many? Did they happen in the same level? When did they happen during the session?

Precious Tips for Whales’ behavioral analysis

Social gaming companies like Fresh8games, Gamesmart, fabula, and  many others, already use behavioral analytics in their optimization arsenal.  LuckyFish Games, for example, uses deep behavioral analytics to capture millions of events that relate to the player behavior, game performance and other social parameters that influence IAP. Read about it in this case study.

  • 2nd Day Retention is a Critical Metric.
  • First and Second Time Deposits are important when real money is involved.
  • Whales’ behavioral analysis should start at FTUE (First Time User Experience).
  • Whales spend more on mini games.
  • Whales jump up in levels faster than dolphins.
  • Averages are counter-productive: focus on medians and quantiles.

This is the kind of actionable insights that can only be achieved with behavioral analysis. Gaming companies can deeply, yet quickly, analyze and get answers to critical business questions that dramatically affect the IAP optimization.

Though Socrates may have predicted the financial success of IAP in mobile war games when he said that “all wars are fought for money,” it was his pupil, Plato, who predicted the importance of behavioral analytics in gaming when he said “You can discover more about a person in an hour of play than in a year of conversation.

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