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How to link engagement to monetization in mobile games and apps



Now subscriptions are everywhere: from services for reading books or watching TV shows to packages of professional software and utilities. At the same time, the proven and classic monetization models have not gone away.

Google as part of its webinar talked about approaches to engaging users, types of monetization, how to connect them together and apply on your project. With examples and data from Google Play.

Engaging players is the foundation of long-term success on Google Play. I will tell you how game developers approach engagement and monetization from different angles:

  • Design. The connection of engagement and monetization on the example of a popular genre.
  • Funnel of users. How linked engagement, retention and monetization based on data from Google Play.

As a result, you get a practical idea of ​​how games involve users to increase revenue.



How the monetization model interacts with engagement


There are four ways in the mobile market to turn a product’s value into revenue. We briefly review these options and how each of them interacts with engagement.

Paid applications (paid or premium)


For paid (premium) applications, users pay once, in advance. Therefore, engagement is in no way connected with monetization, since payment occurs even before engagement. To increase revenue, the benefit of the buyer should be clear already in the application store.

Subscription Apps


In the subscription model, users pay once a period: weekly, monthly, quarterly, annually or seasonally. Ways to engage are different for two types of users:

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(in-app purchases ads)


In-app purchases (IAPs) attract users for free. They have the opportunity to pay gradually in order to improve their experience. In applications with ads, users pay time and attention.

Now more and more applications are integrating both advertising and IAP monetization models. Games are designed to link engagement to monetization. For example, take mobile word games. Their gameplay has natural pauses (when you make a move and wait for the opponent) - this allows the developer to insert pop-up video ads so as not to break the gaming experience and not interfere with involvement.

The rest of the article will focus on how developers connect engagement with monetization in their IAP games.



Aligning user motivation with game design and monetization


Let's look at how developers approach game design and build monetization strategies that are directly related to engagement.

What are games? This is an entertainment product. They are launched to relax or rest. The development of any game begins with the search for reasons why someone should like the project or what benefits it will bring . Then the developers put this understanding on a par with game design and monetization - in order to understand how to derive income from the value of the game.

In other words, user motivation affects game design and monetization . In addition, game design and monetization will influence each other .

The same applies to applications. Value can be entertainment (for example, watching TV shows) or utilitarian use (for example, booking tickets or shopping). In any case, the application should provide some value to the end user.

Game cycles


A good game design is built on the game loop - it is a set of actions that the player performs over and over again. Developers create cycles to emphasize core gameplay and satisfy player motivation. For example, consider the match-3 game cycle and determine the user's motivation.



In match 3, players swap chips to create horizontal, vertical, or diagonal rows of three of the same. Each level challenges with the achievement of various goals in a given number of moves or time. The user in the main cycle will pass the level: win or lose. If the goal is achieved, then the next level begins, otherwise - you need to use life or wait for their recovery.

Match 3 - basic puzzle games. But these two motivators make them so fascinating:

  • Progression. There is a map, goals and levels at which the player wants to advance.
  • Social or competitive. Compare points or progress with friends and / or other players.

The main action that the user repeats is through the levels. If he does not try to pass them, then he does not play. But developers are also considering what actions are forcing players to return. The main motivator in match 3 is progress. Therefore, engagement and retention depend on the discovery of new levels. This is where you need to balance game design and balance. The game should be simple enough so that progress is felt, and complex enough so as not to become boring and monetized.

Now about how the game cycle is related to monetization. You need to understand what engagement activities will create opportunities for monetization. Many projects have an in-game economy and one may wonder: what actions will deplete the game balance in order to increase the demand for purchases. In match-3, monetization usually takes place in three stages:

  1. The player loses the level and clicks “continue”.
  2. The player uses boost to help.
  3. The player buys life to start over.

Passing a level (the main action of engagement) allows for monetization. Losing a level creates an even greater opportunity, because it is directly related to two main motivators of the user: progress and social competition.

The game cycle is not only designed to take into account the motivations of players, but also aims to connect these motivators with monetization.

What applications can learn using game design approaches


The main lesson you can take from games: you need to tightly link engagement and monetization. But the engagement of each application will differ even within the same category. Therefore, it is important to understand several things:

  • Application value and user motivation. The main cycle and how does it relate to key metrics of engagement?
  • How are key engagement activities related to monetization?
  • How to strengthen user engagement activities?

Let's take a look at the loops of a couple of application categories to understand how usage scenarios change.



Dating application. The main motivator is to find love, or at least a date. Actions that the user can perform: register, see the profile, swipe / send a message, then see another profile and repeat the cycle.

The application for health and fitness. Goals: weight loss, increased muscle mass, or overall well-being.

Calorie App. The main cycle can be to track food (breakfast, lunch, dinner) to take into account the daily calorie intake. This is the value of the application. Then the user continues the cycle and periodically checks whether he has reached his goals.

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Showing the value of your app early on will be the key to long-term retention. First day engagement is especially important. This can be seen from the data from the top games on Google Play. The diagram below shows that the longer a new user plays on the first day, the greater the likelihood that he will remain in the game for the next 7 days.



But not all games with similar characteristics have the same increase in retention rate. Retention rates are often due to different engagement experiences (e.g., onboarding or game cycle). The graph below shows two games in the same category. Both have a positive correlation between the number of minutes played per day and retention. It shows that the slope for each of them is different. Game 2 should get better at onboarding and early engagement.



Now let's see how the time of the first day affects monetization during the first week for top games on Google Play. The diagram below shows: the longer the user spends in the game on the first day, the more likely he will have a high lifetime value (LTV) in the first week.



How much the user is involved on day one affects conversion and LTV. This difference is often associated with the design of monetization (how big the potential for spending) and engagement activities (how closely monetization and engagement activities are related in the main cycle).



What is the impact of first-day engagement on D7 retention in apps


The way regular applications will perform is similar to games. Below are two graphs for the most performing applications on Google Play. These graphs show the same positive correlation for both monetization and retention with longer engagement on the first day. The first 20 minutes have a steep slope compared to the D7 - users see the value at the beginning of the first day, and this makes them come back.



If we look at the application cycles that we took as an example earlier, we will see how onboarding affects retention:

  • Dating applications. They have a relatively quick registration process, so users quickly get to the goal. On the first day, you can expect a cool retention schedule.
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Let's look at the software from Google Play and how its data relates. Blinkist is an educational application that in 15 minutes provides users with basic information from non-fiction books, in the form of audio or text. He has a strong correlation between the first day and the likelihood that people will return.



Blinkist has a similar trend with the monetization of W1, as in games. More engagement on the first day of the user's work leads to higher monetization in the next 7 days.

You need to focus on engagement on the first day to encourage retention and monetization. But you need to remember that the use case for engagement will be application dependent.

First day engagement is why developers spend a lot of time creating first user experience cycles (FTUEs), as well as researching consumer perceptions to get design information and quantitative testing during a soft launch. Therefore, when it comes to design, pay attention to this:

  • First user experience and onboarding. How long does it take for users to complete actions that show them the value of the application.
  • Interface. It should be clean and clear.
  • Design and monetization pricing. This may affect early LTV.

How do you optimize user engagement?


I talked about the relationship between first day engagement, monetization, and retention. Now consider the relationship for a common user base. I will show why optimization is critical for future metrics. Let's start with the weekly engagement of all users.

To do this, take all the user engagement for 7 days and break it into buckets, which count the number of days during which each user was active. Put on the X axis and compare with:

  • the next 7 days
  • monetization per user in the next 7 days

This will show how the engagement and monetization of the least active users develop compared to the most active. And it will help you understand how optimizing user engagement for the week (or DAU / WAU ratio) can affect future monetization and engagement.



The graph on the left shows the connection of involvement between two different games. For both games, it shows that a user who has been active 5 of the last 7 days has an average of 4 days of activity in the next 7 days.

The graph on the right shows the relationship between engagement in week 1 and average user spending in the next week. A user who logs in daily spends almost 2 times more than a user who logs in 6 out of 7 days. Here you can also see that the performance of monetization varied significantly: game 1 shows its value better, stimulating monetization.

Let's look at an example


Duolingo is an application for learning more than 35 languages. The learning process goes through lessons and assignments from the basics to the master. The key idea is to learn new words daily. Completion of daily goals is tracked as a daily streak, and motivates users to return. And, if the user missed a day, he can pay to restore his streak. In general, Duolingo motivates users to daily activity.

How does daily activity affect Duolingo's engagement and income? Using statistics by week, we will see a trend similar to games.



The engagement relationship shows that users who were active 6 from the previous 7 days are more likely to be active within 4 of the next 7 days.

How does this relate to user motivation? Why should they use Duolingo? People use this application for language learning and self-improvement. And it enhances motivation in the process of development and completion.

If the user uses Duolingo for less than 2 days, then the cost ratio is lower. Such users do not see the value of the application, because they do not study the language tightly. As engagement grows, a stronger correlation with monetization is seen. This is due to the fact that students achieve success in mastering a new language by regularly entering the application.

How does engagement relate to application monetization?


Stronger weekly engagement is associated with stronger engagement and monetization in the future. As is the case with games.



The monetization curve of top applications has a non-linear growth for more involved users. What caused this? The monetization model can influence how the application performs. Therefore, mixed strategies lead to an increase in user spending.

The subscription model will be more linear and smoothly growing. Adding in-app purchases can lead to increased costs for the users involved. But if the application is not one of those that launch daily or weekly? Remains monthly.

Let’s take a look at MAU on the days when users were active in the calendar month for top grossing applications. The data is divided into two groups of applications: the top 50 and from 51 to 150. The first group has a higher involvement of their monthly active users.



The graph shows that the top 50 applications show more sustainable engagement, while a significantly larger percentage of their users launch them more than 6 days a month compared to 51-150 places . Stable engagement is very important, regardless of the expected frequency of visits - daily, weekly or monthly.

Lessons learned


Monetization management is the optimization of user engagement. Starting from the first day and throughout the entire life cycle.

3 main things:

  1. Understand your engagement metric. Identify engagement activities that correlate (ideally predict) LTV and spending. Think about how to link engagement to user retention and conversion.
  2. Focus on user engagement on day one. High retention and LTV is achieved thanks to users who find the value of the application on the first day.
  3. Optimize user engagement to maximize revenue. Strong, consistent user engagement throughout their entire life cycle helps boost monetization.

And these things need to be considered if you want to shift retention and monetization curves:

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