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ROI for mobile games

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Having a ‘single source of truth’, SKAN-enabled dashboard will help you determine the ROI from your mobile marketing campaigns.  

The importance of ROI in the mobile game industry

The term ‘ROI’, or ‘return on investment’, is mentioned quite a bit in the world of mobile games, and for good reason. Whether you haven’t yet developed your mobile game or it has already long been launched, you need to know what results you are getting / expecting from your investment.

Knowing how to calculate ROI on mobile games, then, is essential. Your knowledge of this will help you fine-tune your approach to revenue generation with your app.

Return on investment is a term of extremely broad relevance across all forms of business. This broadness can make it difficult to calculate ROI on mobile games, given that it must account for staff / personal time costs, marketing, software and so on. 

So, how can you find predictable ways to adjust your marketing spend to improve your mobile game ROI? The answer isn’t to focus solely on vanity metrics like app installs and downloads, which don’t say anything about the value any new players of your game generate. After all, your game might be getting a lot of downloads at any one time, but those won’t do much to improve ROI if large numbers of those new users quickly give up on your game.

Instead, you need to know about player engagement and conversion within your game. This will help ensure more informed marketing decisions allowing you to use your finite budget more efficiently to drive engagement. That will then give you a bigger budget for further user acquisition and growth efforts for your mobile game.     

The relationship between player LTV and mobile game ROI

Calculating mobile game ROI will not be your only important task if you aspire to sustained and predictable growth for your mobile game. You will also need to keep track of other metrics, such as how much it costs for you to acquire each customer, and the value you gain from each customer.

  • For understanding customer acquisition costs, the metric cost per install, or CPI, is often used. Putting it simply, you can calculate CPI by dividing your total expenditure on acquiring customers by the number of times your game has been installed. So, if you know you have spent $150,000 on marketing your game, and this generated 130,000 new installs, your CPI would be $150,000 / 130,000 installs = $1.15
  • It’s not enough to only know the amount each new game install costs you; you will also want to know how much each of those acquired new players is worth. This can be expressed as lifetime value, or LTV. To produce an extremely approximate LTV figure for your game, you can divide revenue by the number of players your game has ever had. It should be noted there are various, more complex ways in which LTV can be calculated, some of which use AI or machine learning to predict future LTV

From the above, you can probably understand why we previously placed so much emphasis on engagement. The longer the period of time for which a player remains engaged with your game, the more this will help drive up your game’s LTV.   

Whatever your mobile game’s LTV is, it needs to exceed your CPI figure – otherwise, your game won’t be profitable. Your game’s CPI exceeding its LTV equates to a negative return on investment.

But the good news is that even if you do have a negative ROI right now, knowing how much it costs for you to acquire a new customer, and how much each customer is worth, will enable you to make the changes needed to improve your ROI. You will be able to get on with isolating inefficiencies in your mobile game growth strategy, so that you can work out exactly what is required to improve ROI.

The relationship between the ROAS and ROI from mobile games

To re-emphasize what we stated earlier, return on investment is a metric of relevance to all types of business. It shows how much profit you are enjoying from your investments – but that includes all your marketing investments. So, marketing resources such as your business’s more general software and IT costs will all feed into your ROI figure.

The importance of ROI in the mobile game industry shouldn’t be doubted, as it allows you to see the overall profitability of your game. But another crucial measure is return on ad spend, or ROAS something which apples ATT has changes have made increasingly difficult to accurately measure. This metric measures the revenue you generate from each dollar you spend on app install campaigns for your game. You can calculate it by dividing ad revenue by ad spending.

So, ROAS doesn’t measure the overall profitability of your mobile game. Instead, it focuses on how much you spend on a given ad, and the amount of money you generate as a direct result of that ad.

When you run an app install campaign, you will want to be sure that the revenue you gain from it is higher than how much you have to spend to acquire those new players.

You should be taking both ROI and ROAS into account when attempting to work out the success of your app install campaigns. However, it is ROAS that will give you the sharpest, clearest indication of how well your campaigns are doing.

How to calculate the ROI on mobile games

As is the case for other metrics commonly associated with this industry, ROI on mobile games can be calculated in a range of ways. Some simple formulas that might be used include:

  • Dividing net return on investment by cost of investment, multiplied by 100
  • Subtracting the initial value of investment from the final value of investment, and dividing this by the cost of investment, before multiplying by 100

But accurately calculating mobile game ROI requires much more than applying a simple mathematical formula. You will need to adopt a holistic view that will help you understand the impact of every development step you take.

When you take the time to understand the nuances that affect the ROI for your mobile game(s), you will be in a much better position to make well-judged changes to your campaigns. This will help fuel the growth of your mobile game(s) in the directions you desire. That, in turn, will mean not spending blindly (post-IDFA) on marketing campaigns as this tends to be where most can maximize their revenue.

SuperScale can help unlock the hidden value within your mobile game by using our Data Platform. The powerful predictive dashboards provide accurate insights into ROAS and LTV in a post-IDFA world. Contact us now to book an intro and benefit from hands-on growth expertise.