Game Development Reference
In-Depth Information
7.6 The Rising Cost of CPI
A successful advertising campaign on any social network is one that achieves a
high conversion rate with a low CPI. Unfortunately, as time passes after the ini-
tial start of your ad campaign, conversion rates tend to drop and your CPI tends
to increase. The reason for this is that the users who were naturally inclined to
investigate your product have already done so, and customers not so inclined get
bored with repeatedly seeing your message. (Remember any television ad cam-
paign that overstayed its welcome, and how quickly it went from being clever to
tired?) Without constantly updating your messaging or changing the advertising
in new and creative ways, the CPI can increase by two times or more in relatively
short order. This phenomenon has not been lost on social game developers:
Once you've acquired the majority of the early adopters, CPIs in a particu-
lar market can increase by 3-5 times from your Day 1 CPI. Fortunately, this
change doesn't happen overnight. Refreshing creative [advertisements], cre-
ating a compelling message, and refining your target audience are the best
ways to combat application saturation.
—John Marsland, Acquisition Manager, Zynga
Let's make sure we understand the implications of the rising cost of user
acquisition as it relates to the different advertising mechanisms available.
Because the cost to acquire a user goes up as the number of users increases,
and because users do eventually leave the system, an unceasing effort to keep a
constant influx of users coming into the funnel eventually reaches a price that
will make your game unprofitable. A good rule of thumb is that the cost to
bring on users currently increases about 10 percent for every additional 100,000
new players. The implication here is that eventually, all social games will reach
a “carrying capacity” beyond which acquiring new users is simply too expen-
sive to be profitable. This nearly axiomatic rule drives most social game devel-
opment companies to constantly keep an eye on the “next great thing” they'll
have to build. This trend line also underscores the importance of driving your
initial CPI down as far as possible. It only gets more expensive from there.
As Marsland tells us, the only way to combat this problem, even slightly, is
to vary the messaging. In order to effectively test new messaging to see which
new ideas might yield the best CTR numbers, most social games have dedi-
cated, full-time marketing analysts. These marketing analysts make careful use
of A/B or multivariant testing to see which ads are the most effective before
rolling them out on a large scale.
It should be clear from this discussion that the biggest risk to a new social
game (after it has been designed) is that the marketing campaign will fail to
capture users efficiently enough to “feed the funnel” long enough that the game
can make a significant return on the initial development investment, as well as
the initial round of marketing costs.
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