How bad is the fight to get more users in mobile apps?
Tough enough that TinyCo, an Andreessen Horowitz-backed mobile gaming company, is doing a revenue share with developers that successfully drive them traffic.
The company, which has raised $18 million, says it will give developers a 50 percent split or more if they send them customers that ultimately end up spending inside of their games.
Developers can drive up the revenue share in their favor if they do special integrations that really promote TinyCo’s work. An example is Fluik’s game Office Jerk, where the company actually lets players throw an egg at their annoying co-worker instead of a stapler or a roll of toilet paper. The egg is a reference to TinyCo’s game Tiny Monsters.
“If a partner sends us a user that stays within our game for 1.5 years who ends up spending $1,000 in revenue, then we’ll split that revenue 50-50 with them,” said Andrew Green, who is a director of business development for TinyCo. Green says partners will get a dashboard that shows them how much the users they’ve sent TinyCo are spending.
Like many other mobile game developers, TinyCo has done all kinds of experimentation to see how they can get high-spending and loyal users cheaply. Fiksu, a Boston-based company that helps developers mediate between all sorts of marketing channels to get users, said that the average cost to acquire a loyal user, or one that opens an app three times, was $1.34 in August.
Many gaming studios, especially the mid-size ones that have about 100 to 150 employees, tend to balance between 30 different methods for acquiring users. They use everything from free-app-a-day promotion methods to banner ads to full-screen ads that interrupt gameplay in other apps. Some spend millions of dollars every month on app marketing, which crimps their profit margins.
Green said the partner integrations the company is gunning for with this new program tend to be more valuable. He said that integrations like the Fluik one above hat a 12.3 percent conversation rate, compared to a 3.5 percent conversion rate for regular, old mobile banner ads.
“We have a situation with discoverability. Marketing is kind of choking the industry,” Green said. “We’re trying more of an affiliate model, which isn’t currently being done.” TinyCo had worked on other experiments in the past, including a $5 million fund to finance third-party games (which would grow the size of their user network).