In the first part of this series, we discussed how monetization in Hypercasual games works. In this article, we will discuss the flip side of UAM: User acquisition (UA). The name says it all: UA involves all the processes that push a random person to become a user, meaning to download and play the game.
UA in HC games relies on advertising the game, and involves a cost for the publisher. While monetization revenue for every user is calculated with lifetime value (LTV), the cost of UA is calculated with CPI (cost per install). Logically speaking, CPI must always be lower than LTV, or else the game wouldn’t be profitable and there would be no incentive to keep working on it.
How does UA work?
It’s a simple process. The UAM team sets out on a marketing campaign to advertise their game. This means they will basically spend money to display ads according to their target CPI. Let’s break it down with an example:
- Assume that the team is estimating a target CPI of $0.25. Therefore, if they pay the ad platform $200, they expect that 800 users install the game (800 x $0.25 = $200).
- Let’s say that, when the budget has been fully spent, the ad platform will have displayed the ad 10000 times. The ad generated 10000 impressions, meaning the eCPM (cost per thousand views) is $20 ((200/10000) x 1000).
- Considering that 2000 users, one out of five, clicked on the ad. The click-through rate (CTR) is 20%.
- Finally, 1000 users, half of them, ended up downloading the game. The conversion rate (CVR) is 50%.
- Therefore, the $200 budget generated 1000 installs. The CPI is: 200/1000 = $0.20. Not only did the UAM team lead a successful campaign with the $200 budget, but it also ended up saving $0.05 for every install.
Generally, in HC games, the UAM team focuses on lowering the CPI and the eCPM, while raising the CVR and CTR, in order to maximize its return on investment (ROI).