Leveraging Customer Lifetime Value for user acquisition campaigns

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Learn how to: - track - compute - and leverage Customer Lifetime Value for the user acquisition campaigns of your mobile games. Featuring industry experts Eric Seufert from Wooga, James Peng from Storm8 and Simon Kendall from adjust by adeven. Get the right users!

Transcript of Leveraging Customer Lifetime Value for user acquisition campaigns

  • AppLift.com 1 Leveraging Customer Lifetime Value for mobile user acquisition campaigns AppLift Webinars April 23, 2014
  • AppLift.com 2Leveraging Customer Lifetime Value for user acquisition campaigns About AppLift 300+ Game Publishers The leading mobile games marketing platform 400+ Games 2,000+ Media Partners We are a team of 85+ mobile game enthusiasts We are headquartered in Berlin with offices in San Francisco and Seoul We come from 25+ countries and speak 20+ languages We are backed by Prime Ventures and HitFox Group with USD 20M investment 100% mobile games LTV focus All key markets
  • AppLift.com 3Leveraging Customer Lifetime Value for user acquisition campaigns Our panelists Eric Seufert Head of Marketing, Wooga Eric Seufert is a quantitative marketer with a passion for blending real-world problems with large amounts of data, econometric frameworks, and analytical systems. His professional specialty lies in programmatic statistical methods and predictive forecasting for freemium products. Eric received an undergraduate degree in Finance from the University of Texas at Austin and an MA in Economics from University College London, where he was an Erasmus Mundus scholar. Eric joined Skype immediately out of graduate school and subsequently held marketing and strategy roles at Digital Chocolate and Wooga, where he is now the Head of Marketing. Eric is also the author of Freemium Economics, published by Elsevier in 2014. Originally from Texas, Eric currently lives in Berlin. In his spare time, Eric enjoys traveling and writing.
  • AppLift.com 4Leveraging Customer Lifetime Value for user acquisition campaigns Our panelists James Peng Head of User Acquisition and Monetization, Storm8 James Peng leads global user acquisition and monetization for Storm8's complete portfolio of 40+ titles. Storm8 is a leading mobile social gaming network and developer with more than 50 million monthly active users and 600 million downloads across 300 million devices worldwide. Prior to joining Storm8,James worked at H.I.G. Capital, a $15 billion private equity fund, where he evaluated, structured, and executed leveraged buyouts in partnership with management teams. Prior to that, he worked as an investment banker for Lazard, where he advised on various M&A and restructuring deals.
  • AppLift.com 5Leveraging Customer Lifetime Value for user acquisition campaigns Our panelists Simon Kendall Product Manager, adjust by adeven Simon is adjusts Product Manager and all rounder technology translator. He assists the CTO, and the sales and technology teams in transforming product feedback and business analysis into product engineering. Simon holds regular technology whiteboard sessions to support the sales and account management teams with their product knowledge and trouble shoots complex product requests from clients. Over the past year he has also managed the technical integration of adjust with 200 partners and networks. Simon is bilingual in Swedish and English. He has previously presented at the 2013 Apps Promotions Summit in Berlin on cohort analysis and discussed the anatomy of a metric at the 2014 Winter Nights conference in St Petersburg.
  • AppLift.com 6Leveraging Customer Lifetime Value for user acquisition campaigns Acquiring the right users 1 2 3 4 What is LTV How to track and measure LTV in practice How to leverage LTV for user acquisition campaigns Questions
  • AppLift.com 7AppLift.com 1. What is LTV? What is Customer Lifetime Value? How is LTV defined theoretically? What are its components? Why is it important for game publishers?
  • AppLift.com 8AppLift.com 1.1 What is Customer Lifetime Value? Eric: Conceptually, LTV is discounted expected revenue contributions from a user. Practically, LTV is the price you are willing to pay in order to bring a user into your game, given a set of characteristics of that user. James: LTV is the value that a user brings in, including monetary value (in-app purchases) and additional organic value. Simon: LTV is the total value that a user brings during the period from initial conversion until he/she no longer engages with the app.
  • AppLift.com 9AppLift.com 1.2 How is LTV defined theoretically? 2 conceptual approaches to evaluate LTV: The retention approach bottom up The monetization approach top down
  • AppLift.com 10Leveraging Customer Lifetime Value for user acquisition campaigns What is LTV? The retention approach (bottom up) Source: Profitably launching Jelly Splash to #1, a marketing postmortem. GDC 2014, Eric Seufert
  • AppLift.com 11Leveraging Customer Lifetime Value for user acquisition campaigns The retention approach (bottom up) Source: Profitably launching Jelly Splash to #1, a marketing postmortem. GDC 2014, Eric Seufert Eric: 1. Use a retention profile to calculate customers lifetime 2. Use ARPDAU as a monetization component of LTV 3. Multiple the two elements
  • AppLift.com 12Leveraging Customer Lifetime Value for user acquisition campaigns The retention approach (bottom up) Source: Profitably launching Jelly Splash to #1, a marketing postmortem. GDC 2014, Eric Seufert Eric: This approach is generally used in a prototyping stage of the game and it is not meant to be very accurate. It gives a rough estimation of LTV. If you have a high LTV you can generally spend more to acquire users and if you have a low LTV wellyou cant.
  • AppLift.com 13Leveraging Customer Lifetime Value for user acquisition campaigns What is LTV? The monetization approach (top down) Source: Freemium Economics, Eric Seufert
  • AppLift.com 14Leveraging Customer Lifetime Value for user acquisition campaigns The monetization approach (top down) Source: Freemium Economics, Eric Seufert Eric: This is a more practical model compared to the bottom up approach. 1. Break down groups of users that you are targeting by various sets of characteristics (e.g., geography, platform, device). 2. Gather minimal level of historical data about monetization from that specific group. 3. Project it out based on a logarithmic term. This model enables to make a conclusion on how much you are willing to spend to recoup money over a certain amount of time. We generally use 180 days for casual games.
  • AppLift.com 15AppLift.com 1.3 Why is LTV important for game publishers? James: LTV helps games publishers understand the ability to pay a different cost per user from every different channel. The more accurate you are across every single campaign, the more efficiently you can buy and maximize your targeted returns with your targeted volumes. The more precise you are the more powerful in the marketplace you can be the more efficiently you can command volumes from every different channel
  • AppLift.com 16AppLift.com 2. How to track and measure LTV in practice How to measure it? How is it computed in practice? How to track post-install events? How much is it to set it up? Which events to track? How relevant are they? Whats the role of cohort analysis in tracking LTV? How to perform cohort segmentation?
  • AppLift.com 17AppLift.com 2.1 How is LTV computed in practice? James: First, you need to have the infrastructure in place to be able to match the different sources of revenue with the devices that they belong to. In practice, I typically track cohort revenues using KPIs (e.g., day 1, day 3, week 1, week 2, week 3, month 1). To calculate the LTV, I take all the history to-date and map a revenue curve for every game.
  • AppLift.com 18AppLift.com 2.1 How is LTV computed in practice? James: Generally LTV curve is similar across most similar sources. If you have a very strong understanding of how a user behaves across one particular game, you can map that across similar channels that you have. If you do not have any information available, you might need to use a proxy, such as a title in the same genre, and apply it on a revenue curve. Otherwise, you will have to use multipliers and use a pre-build estimate.
  • AppLift.com 19AppLift.com 2.1 How is LTV computed in practice? Eric: The biggest mistake that prevents people from getting insights from their data not splitting up users by cohorts. Looking at users as at a collection of characteristics (the network they are acquired from, the location, the date they were acquired on, etc.) helps to group users into groups that make sense. You should track the cohorts every time. If you dont, you fall into a trap where you are averaging users from different age groups and comparing information that is not comparable (e.g., users from Basil vs. Norway vs. U.S.).
  • AppLift.com 20AppLift.com 2.2 Tracking post-install events Simon: If you have a good tracking solution (in-house or 3rd party), technical implementation of post-instal