Pay-Per-Install is Going to Get Crazy
If you’re in the games industry, you’re pretty used to seeing pretty crazy CPI rates. $1-2 for strong revenue generating games across networks. This goes up to $3-5 for games like Clash of Clans and Tiny Zoo in other well monetizing games — usually done through direct deals. Then there’s the crazy $8-9 by companies like GREE and Mobage to gain steam in the Western markets.
Supercell is rumored to be spending upwards of $1M per day in installs for their two titles, Hay Day and Clash of Clans. They along with the Japanese MMORPG juggernauts continue to dominate the impressions space. King dominated as well, but they’ve moved towards a volume play now with cheap banner ads now that the game is on practically every phone.
As ARPU continues to go up in games, the CPIs will increase as well. NaturalMotion was in the news just over a year ago for CSR Racing making $10M a month. Just a few months later, Supercell was making $80M a month across two titles. This trend will continue as gamers become more comfortable spending more money on IAP and as developers optimize their revenue further through game mechanics.
So where does it get crazy?
When King, Supercell and others don’t have 2 games in the store, but 10, 20 and more and they continue to spend the same amounts, there is going to be serious lack of inventory in the games space. Developers will have to turn to WhatsApp, We Chat, Facebook and Twitter to get volume. If that doesn’t happen, smaller developers without big budgets will be pushed out. King has over 140 games in its flash portfolio that it can move to mobile and they have 2 games in the Top 4 of Apple’s Top Grossing Chart. Supercell is working on over 40 games right now (although their strategy kills most of them before they launch) and should be releasing 5 or so over the next 18 months. Supercell also has 2 of the top 4 alongside King.
Beyond Games
Games isn’t all of it. Brands’ apps typically go for $2-3 CPIs. But if you look at apps now, they aren’t entirely useful. You can get info on new products, store locations. You can shop in them, but it’s a pain in the ass with the credit card and address entering process. But it’s pretty clear that Apple will release a payment solution for apps. The simplicity of the fingerprint on the 5s makes this something that’s definitely possible. Soon, it will incorporate iCloud Keychain which is the first step to gathering more credit cards than iTunes has right now. Pay with iCloud is around the corner. Once this happens, shopping on apps becomes a very real thing. Put your items in a shopping cart, click a Buy button, scan your fingerprint and it sends the items to your default shipping address.
This will takes brands’ apps from a brand/light shopping play, to a serious shopping platform. The value brands can get out of it can be up to $10-20 per user. Which will bring brands to spend much higher CPIs than they are now.
So What Now?
Luckily, we have a lot of untapped inventory in Facebook, Twitter, WhatsApp, etc. As ARPUs increase, developers will spend more to get quality users. FB/Twitter etc., can help with targeted rewards. Although, Facebook is only skimming the surface now, they’re seeing a ton of value. Twitter hasn’t touched it, but there’s no way they’ll ignore it and let Facebook dominate. This will be very useful for brands looking to get app installs as these services can help with volume.
On the games side, to get quality users, you have to advertise in quality games, and that’s what’s going to be very limiting and will continue to drive up costs. Unless FB/Twitter, etc., find a way to target quality gamers who will spend money, it’s going to be a bumpy road.
Overall, CPIs are going to jump up and developers/brands are going to have to be creative in how they obtain users. This is just the start.
