Thanks to GREE and Zynga's deep wallets, mobile user acquisition costs peaked at $6 over Easter

High stake gamble?

Thanks to GREE and Zynga's deep wallets, mobile user acquisition costs peaked at $6 over Easter
During GDC 2012, we heard that user acquisition costs on mobile were rising fast.

Parity to the $2 paid for a Facebook user in North America was an oft-quoted rule of thumb for how quickly the market was moving; up from around 75c mere months ago.

But apparently $2 per user is now looking quaint.

Big buying weekend

According to Michael Oiknine, the CEO of analytics outfit Apsalar, the cost was peaking around $6 per user over Easter.

Not only did the long weekend holiday provide the opportunity for the typical price rise seen when a lot of people have leisure time on their hands, but it combined with strong campaign buying from some of the sector's biggest players.

The likes of Zynga and TinyCo are always busy, but the big shift has been the arrival of GREE, with the Japanese social giant releasing its first two US developed free-to-play games Zombie Jombie and Alien Family in March.

Higher and higher?

And the feeling is price can always go higher.

In pure user acquisition terms, when Zynga bought OMGPOP, it paid around $16 for each of the active mobile players of Draw Something, although this is a number that's dropped as the game's audience has grown.

Similarly, Facebook's $1 billion move for Instagram valued each of its 30 million users at over $30.

Of course, as Oiknine points out, the economics of such a situation are simple. It makes sense to buy users at $6 a pop if you can generate more than $6 lifetime value from each them.

The problem is that even with a conversion rate of 10 percent (relatively high, compared to an average of less than 5 percent), that means you need to extract at least $60 from each paying user to hit breakeven.

So, now, the trick is knowing enough about said potential players/payers in order to target a lot of the plus-$6 users, sieving out the vast majority of the sub-$6 users; an area in which Apsalar's behavioural tracking analytics are designed to help.
Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.