Startup types, stages and metrics baselines -...
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Transcript of Startup types, stages and metrics baselines -...
Agenda [1/2]Recap
Intro
Startup types
Mobile games
Startup type + stages
Establishing goals
Mobile games
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Agenda [2/2]
Lab:
Trabalhos escritos de análise de jogo comercial
Dúvidas e questões
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Intro
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IntroHow you make money drives most of what should be measured, this is basically defined by:
Stage of the company (as seen in last class)
Activity of the company
Starting point: big picture and look for what a “engaged" costumer is.
Fundamental blocks
Segment: different users mean different monetisations
Optimize for good costumers
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Startup types
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Startup typesThere are several ways of building a business
It is an ever-increasing list
https://hackpad.com/Web-And-Mobile-Revenue-Models-final-EgXuEtSibE7
Consider Amazon:
Transactional, physical-delivery, SEM, marketplace, UGC…
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Startup typesAs a matter of simplicity, we chose to focus on six models described by Croll & Yoskovitz (2013):
E-commerce: Amazon
SaaS: Skype, Dropbox, etc.
App (in-app purchases): Angry Birds, Clash of Clans, etc.
Advertising: Online newspaper, blogs
Social network (UGC): Facebook, Twitter, etc.
Two-sided marketplace: Uber, Ebay, Etsy, etc.
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App modelIt is a model made famous especially after iTunes:
App Store (Apple), Google Play, Microsoft Store, Steam, PSN (Sony), etc.
Seamlessly content purchase
Exclusive to a unique vertical or Porting (more than one store)
Challenge: gatekeeping
Limits continuous deployment or A/B Testing, for example
Workaround:
Downloadable content
Launch in a specific country
Launch in Google Play (faster than App Store)
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App model - Revenue Streams
Up-front purchase: buying the game from the store
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App model - Revenue Streams
Downloadable content: new maps, new skins, new players, etc.
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App model - Revenue Streams
Avatar/Character customisation: clothes, hair, etc.
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App model - Revenue Streams
Advantages: weapons, upgrades, power-ups, etc.
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App model - Revenue Streams
Countdown timers: avoid long waits for progress
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App model - Revenue Streams
Upselling: upgrade to bundles that contain a certain number of features
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App model - Revenue Streams
Subscription: regular payment of a defined fee.
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App model - Revenue Streams
In-game ads: advertising impression or video watching mid-game
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App model - Revenue Streams
Gift cards: physical cards that gives virtual credits
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App model - Revenue Streams
Downloadable content: new maps, new players, etc.
Avatar/Character customisation: clothes, hair, etc.
Advantages: weapons, upgrades, power-ups, etc.
Countdown timers: avoid long waits for progress
Upselling: upgrade to bundles that combines features or various revenue items
Subscription: regular payment of a defined fee.
In-game ads: advertising impression or video watching mid-game
Up-front purchase: buying the game from the store
Gift cards: physical cards that gives virtual credits
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App model - MetricsRevenue Streams ≠ Business Model
Developers need to track a certain number of metrics
There is a pattern/flow of how to "use" an specific app
Discover: search, featured or ranking
Review analysis: screenshots, ratings or comments
Download: free or paid
Register: email, Facebook, etc.
Play
In-game economy: virtual coins, watch ads, power-ups, upgrades
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App model - Metrics [Downloads]
It corresponds to the number of times a game has been downloaded
ASO: App Store Optimization
A number of techniques employed to reverse engineer the dynamics of an app store
Getting featured impacts ranking (Distimo):
Android: +42 positions
iPhone: +15 positions
Flurry:
Top 25 apps accounts for 15% of all revenue
Remaining Top 100 accounts for 17%
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App model - Metrics [ARPU]
It corresponds to the average revenue per active user (monthly or lifetime)
ARPU = Monthly revenue / # monthly active users
There must be a balance between fun and revenue streams
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App model - Metrics [Churn]
User abandonment must be tracked in 3 time periods:
1 day: bug in registration, tutorial, etc.
1 week: problem in deepness of the game
1 month: poor update/retention planning
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App model - Metrics summary
Downloads
Costumer acquisition cost (CAC)
Launch rate
Percent of active players
Percent of users who pay
Time to first purchase
Monthly average revenue per user (ARPU)
Ratings click-through
Virality
Churn
Costumer lifetime value (CLV)
Is my strategy working?
Apply analysis techniques: Cohort, Segmentation, etc.
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Monitoring: startup types + stages
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Startup type + stage
We have already seen two ways of categorising a certain business:
Type: basic activity and functioning
Stage: maturity and development
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Startup type + stage
Their combination helps defining the "what" and the "when"
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Startup type + stage
We have already seen two ways of categorising a certain business:
Type: basic activity and functioning
Stage: maturity and development
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Defining goals
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Defining goals - Intro
Now that we know which and when to focus on certain metrics
The question is: “What's acceptable?”
"What’s normal?”
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Defining goals - IntroIt is really hard to define baseline for digital products
Ever-changing rules and players
Maturity of a particular model
Rough idea: Startup Compass has a good database on “averages"
Tip: Do not rely on averages, most startup fails
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Defining goalsSome metrics are foundational for almost all business model:
Growth rate
User engagement
Pricing
Costumer acquisition
Virality
Mailing list effectiveness
Uptime
Time on site
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Defining goalsSome metrics are foundational for almost all business model:
Growth rate
User engagement
Pricing
Costumer acquisition
Virality
Mailing list effectiveness
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Growth rate - Goal
Goal: 5-7% / week in terms of stage:
Pre-revenue (Stickiness and Virality): Active users
Revenue on: Growth of revenue
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Engaged users - GoalsWeb-based service: 30% of registered users / month
Mobile-based:
30% of download users / month
10% of registered user / day
Concurrent usage:
Maximum of 10% of daily users
The rate of 30/10/10 is common across a variety of segments
Moving past that: go to Virality, Revenue or Scale stages
Find leading indicators of growth
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Pricing - Goal
Depends on the product or service market
Testing price sensitivity is key
Very few startups do so!Recommendation: find the "sweet spot" and aim for 10% below for user growth
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Costumer Acquisition Cost - Goal
It totally depends on the market
Rule of thumb goal: 33% of Costumer Lifetime Value
Churn and Costumer Breakeven has a huge impact on this rate: lagging indicator
Forces a baseline: early comparison
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Virality - GoalAbove Viral Coefficient above 1 is great, but very hard to achieve
A coefficient of 0.75 is pretty good
Build inherent virality into your game
Artificial virality must be contrasted with the costumers it brings
Important: helps to reduce Costumer Acquisition Cost
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Mailing List - Goal
Open rate: 20-30%
Click-through rate: above 5%
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Goals for App metricsSeveral metrics that applies across segments, as seen previously
Some are more specific for mobile apps
App size
Costumer acquisition cost
Launch rate
Etc.
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Goals for App metricsSeveral metrics that applies across segments, as seen previously
Some are more specific for mobile apps
App size
Costumer acquisition cost
Etc.
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App size - App metrics
It should be under 50MB, otherwise your user will need Wi-Fi connection
This can be minimised by downloading additional content after install
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Costumer Acquisition Cost - App metrics
App Store Optimization: two types of marketing:
Mercenary: paid downloads and review ratings
Brings other users through app store rankings
Goal: $0.50 per install
Legitimate: banner ads within other apps
Organic, more engaged users
Goal: $2.50 per install
Overall CAC: less than $0.75
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Percent of active players - App metrics
Research from Flurry (200,000 apps):
54% remained after one month
43% remained after two months
35% remained after three months
3.7 interactions per day (high variance)
Engagement increase: 25% to 35% in the third month
Smartphone: 12.9 times / week for 4.1 minutes
Tablet: 9.5 times / week for 8.2 minutes
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Percent of paying players - App metrics
Freemium: 2% conversion (free to paid version)
In-app purchase: 1,5% of users buys something
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Average revenue per daily active user - App metrics
Per game genre:
$0,01 - $0,05 for puzzle, caretaking and simulation games
$0,03 - $0,07 for hidden object, tournament and adventure
$0,05 - $0,10 for RPG, gambling and poker games
Aim for above $0,05 (ARPDAU)
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Monthly average revenue per user - App metrics
Average: $3 per month or $0.10 per day
Depends a lot from market segment
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Monthly average revenue per user - App metrics
Average: $3 per month or $0.10 per day
Depends a lot from market segment
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Average revenue per paying user - App metricsDepends on the level of expenditure
Whales: 10% players, ARPU of $20
Dolphins: 40% players, ARPU of $5
Minnows: 50% players, ARPU of $1
Identify leading indicator of behaviour for these categories
Offer in-game monetisations for each kind
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Review rating click-through - App metrics
Number of people who review an app
Less than 1.5% for paid apps
A lot less than 1% for free apps
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ConclusionKnowing what to measure drives strategy:
Frequently used with loyalty: in-app purchases, advertising
Frequently used without loyalty: per-transaction fee
Infrequent, low-loyalty: up-front purchase, one time fee
Infrequent, high-loyalty: upselling, invite other users
Having some metrics baseline helps starting somewhere and benchmark
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