Eric Seufert, VP of User Acquisition and Network Engagement in Rovio, spoke to us about cross-promotion, the real costs of user acquisition and the pros and cons of video ads.
As you know, the UA today is very high, very costly. And is there any roof of the UA’s costs year-to-year?
You can’t just look at the at the headline, average costs that are reported by companies like Fiksu, because they are really misleading. If you think about the prices on advertising, there’s propensity to click. There’s a click-through rate, and then there’s the cost of the media. What I’ve seen is that the cost of the media hasn’t really changed that much year-to-year. So is the cost of CPM media, of buying CPM. Except for new formats that have become available – like video, like playable ads. That kind of stuff is more expensive. But if the cost of media’s not changing, it just means, well, if CPI prices are going up, people are becoming less responsive to ads. What I was discussing in my talk is that there’s no… desire across smartphone owners to install new apps. There are certain needs, and they are met. They’re not waking up in the morning and opening the App Store and just searching aimlessly for something new, anything to download. So part of that is becoming less responsive to ads because they’re satisfied. As far as I’m concerned, they are satisfied with the mobile experience. So the only way to recruit them to your game is actually to recruit them away from something. So if you are the creator of something that people recognize as having high quality or being great fun or something…
Eric Seufert: Favorite IP, exactly. Franchise. Then it’s actually easier to get people to click on ads. So when we were launching Angry Birds 2, we had $1 CPIs. In the US. At launch. Because, you know, it was pretty easy to get people to click on these ads. By the same token, we experimented with some new IP. It was derivative IP and that did not resonate at all. And it was very expensive.
What type of advertisement do you want to use?
Well, it depends on how you think about your portfolio, how you think about the IP that you create. Because if you put just aimlessly apps on the app store, you’ll have to recruit users from other apps; you’ll have to steal timeshare from something else. How do you do that? So that becomes a more strategic question. That doesn’t just comprise marketing, that comprises everything. What kind of products do you make, are you investing in a long term IP, what kind of verticals you want to be in – that kind of thing.
You know, after the very successful story of Flappy Bird on the market appeared the Ketchupp studio, that invented an interesting type of business. Every two weeks they publish a new game, simple but very addictive, and they just transfer traffic from one to another. This type of model still works. But can this type of business be implemented to use by other companies, what do you think?
Yes, sure, that’s a big part of what I do at Rovio. Overseeing user acquisition and cross-promotion, we made a lot of really great strides last year. We built cross-promotion ad units, and we changed the way that we actually cross-promote games to be a more entertaining experience. We put content alongside cross-promotion, as opposed to just basically using these ads. You know, it seems like it should be… At GDC I was talking about what we’ve done in this area, and I think a lot of times when I talk to developers, talk about cross-promotion, how can it be used strategically, they think, like, well, that’s fine, but max you’re only gonna be able to move is 1 percent of your DAU into the new game, like, 1 or 2 or 3 percent. If you think about the click-through rates… That’s definitely not the experience at Rovio. When we made the cross-promotion native, when we had integration be more meaningful than just an ad, the game was involved.
Yes, I mean, you can do it in a meaningful way, but it’s not just throwing an ad up, it’s actually thinking about how do you unite these two games, and they can share the experience right. We have this one game, Nibblers, and we have Angry Birds Pop! which is doing very well. And we watch the new game Nibblers…
Yes, I know the game.
What I want to be doing when launching a game is I want to do a mini-portfolio within the Rovio portfolio. I want to build a tight integration between the two games so people would play both. What we did, we actually had 25 percent of the Nibblers’ user base that came from Angry Birds Pop!
But why didn’t you use Angry Birds IP?
Just IP. You said that you had just invented a new game, Nibblers. But Nibblers doesn’t use Angry Birds IP. Why so?
Well, that was kind of thinking beyond that. Because if you just rely on the same IP forever, you won’t have anything new. I mean, those two games were the closest to each other in terms of gameplay, so it would make more sense to cross-promote into that game, even though it’s not an Angry Birds IP. You have to invest in the new IP.
But what about cannibalization? Because these two games are pretty much the same – same mechanic, both of them have one audience.
The part of this is also UA strategy. Nibblers monetizes better. So what we’re able to do is acquire users for POP! cheaply, because of Angry Birds, and then move them into Nibblers, because users there spend more money.
One more question about video ads. There is one case when guys added a rewarded video, and people stopped spending on IAP. So, is video ad is a really cool thing or just a fashion thing?
What I’ve seen generally is that the opposite happens. Once you introduce the rewarded video, people spend more money. So you see, a lot of people generally haven’t spent money in a game before. They are not one hundred percent convinced. They want to spend money. But they want you to give them that free thing. You show them what they can buy with IAP. And they are more likely to spend in the future. You show them – this is what you could buy with money. We’re gonna give it to you for free – this time. In the future, you have to pay. They say, yes, actually I got a lot of value out of this! This is worth spending money on. And next time they will. But you have to be systematic about it. You can’t just slap a video. I played this… kind of card battler game. You basically go to battle, and you have a certain amount of cards, but you can always have another one after watching a video ad. And I’ve never ever paid! Because I knew that I could watch another video.
Yes, I see. I suppose that was all. Thank you very much for your time!