Why building a robust mobile consumer network
takes precedence over earning advertising revenues

When our Parking Frenzy app became the No.1 app in most of the leading countries in the world (such as the USA/UK etc), the rub off (increased downloads) on the other apps that we owned was not significant.

Some of our apps got noticed when consumers clicked on the ‘our games’ link within Parking Frenzy, but that did not lead to a significant increase in downloads.

This led us to a major realization: We were sacrificing on building a major mobile consumer community (via our apps) in pursuit of short lived advertising revenues.Games2win has a repository of 40 games out of which 10-15 we are really proud of.

The obvious question we then asked ourselves was, ‘what is more valuable? A massive community of players or cash revenues?”

To find out the answer, we ran an experiment. This was the background:

–  We learnt via analytics that the most of the audience playing parking frenzy was teen and tween girls.

–  Via twitter we figured these girls liked being challenged doing real life tasks (like parking a car) in a game – hence their fondness for Parking Frenzy.

–  We switched off commercial ads in Parking Frenzy.

–  Finally, we created simple yet exciting advertising banners for our other successful game called ‘Super Mom’ that we placed in our Parking Frenzy game.

– Super Mom was chosen because like Parking Frenzy, the game challenged young girls to take care of a baby!

This was the result of the experiment:

From the day we began advertising Super Mom in Parking Frenzy, we saw a healthy bump in downloads of Super Mom.

The game also started achieving some top game ranks in key countries.

Downloads Picking Up

Supermom Downloads Picking Up

App: SuperMom Free | Source: Appfigures.com

Ranks Climbing Up

Supermom ranks climbing up

App: SuperMom Free | Source: Appfigures.com

Economic Sacrifice vs. Economic Benefit

This is the math:

– We generated an additional 200,000 downloads for our Super Mom game in the 25 day experiment via in-games ads placed in Parking Frenzy. Without these ads, we would not have received these extra downloads.

– Assuming the metric of US$ 1.00 being the cost per download (as per this Wall Street Journal Article (requires a sign in) the cost is US$ 1.80- US$2), it would be safe to assume that our own promotion of our own app had resulted in ‘download value creation’ of say US$ 200,000.

– As far as advertising revenues went, Parking Frenzy was generating approx 3000 US$ per day. In the 25 days that we switched off the advertising to implement this experiment, we sacrificed potential earnings of US$ 75,000.

– Net of all considerations, we still came out positive with an excess value of US$ 125,000 (200,000 less 75,000)!

So, it was clear that the ‘value’ of creating a consumer community far exceeded advertising revenues – although the advertising revenues meant real cash received, whereas the value of the community was theoretical.

Other considerations

– We believe that the iTunes apps downloaded by casual gamers on their iTouchs and iPads usually remain dormant on those devices after the initial fancy of the users playing those apps dies out.

– These apps aren’t deleted; they just remain ignored by the user on her device.

– The belief is further proven by this data.

We calculate the % of ‘updates’ of an app once it’s made live on the iTunes store as compared to its total installed base. The number of updates downloaded conclusively gives us the number of devices on which the original app still lives (for the download to be recorded by Apple as an ‘update’)

Review this data for Parking Frenzy (Android) :

Also, updates of apps continue for months after it goes live on the store, proving once again that consumers stumble upon old forgotten apps on their devices and then update the app spontaneously. Of course, this is a small number and is not significant to drive usage of an app.

Owning a mobile consumer community therefore becomes valuable since:

– It allows a large ‘network’ of apps to be discovered and downloaded via in-game cross promotions.

– Free successful apps can easily become high revenue generators with virtual paid items and freemium packs introduced in their future updates. It can generate significant revenues when compared to advertising revenues (this is a hypothesis we still have to prove using our own example).

Conclusion:

It’s clear that owning, building and cultivating a network is far more profitable that succumbing to short lived advertising revenues that may fulfill very immediate cash flow concerns but actually negate long-term value creation for a long haul mobile game Company!

Angry Birds on Mobile and Facebook on the web are Sterling examples of the same and this is the path that Games2win has chosen for itself!