Successful User Acquisition Strategies During the Recession - Ratko Bozovic, from Sandsoft

[Music] thank you grab I guess the ball by the horns of the big the elephant in the room in the room is uh the thorny issue of the coming recession and what that might mean for markets and how we how we deal with that so to help us answer that question and navigate I'd like to welcome the stage sandstov sansosovich his there he is come up I don't think I'm loud enough is that you can hear me good right starting with people we are a people first company that's focused on mobile first game publishing but we also announced the opening of the game Studio recently and we're also doing Investments and a couple other things that you'll heard about in the next few months so as I said we are headquartered in

Riyadh we announced the opening of the game studios for those who are open for new jobs and the the ones that are developing uh doing art and not any other things related to game development please check out our LinkedIn page we also have offices in a couple of other places like Shanghai in China Barcelona Helsinki and we're also co-developing a game with the team that's sitting in lemington spa in the United Kingdom so let's start with uh the global Trends and uh the question right now that's been asked for a lot of times throughout this year are we in a recession already or it's already started and most of the economists actually agree that uh the recession has started because we saw a couple of consecutive quarters of GDP decline uh but I'm focusing now on actually on the gaming and gaming is of course part of the tech sector which is a bit struggling right now uh and one obvious example of this is this chart that I

pulled only a week ago and it's already outdated because there are a couple of new layoffs like 11 000 people from Facebook and a couple of others and now we see actually uh quarter for fourth quarter as the biggest uh in terms of the layoffs uh in uh in this year so the question is whether gaming industry uh will be Recession Proof and the current reports are not giving us good signals as you can see uh there are more and more reports that are showing that the consumer spending in gaming is declining so yeah we are not that Recession Proof as we thought of mobile gaming as the biggest part of of gaming industry which holds actually more than half of the overall revenue is also struggling a little bit in the last couple of quarters this is the data from sensor Tower which shows that uh there was a certain decline for the last three quarters uh similar charts from data AI shows The Gaming revenue and model

gaming for the last four years and as you can see in the third quarter of this year there was the for the first time a decline but on the bright side if you compare it to the pre-pandemic period 2019 you can see that there was actually still a growth of 25 percent so what can we expect how we can expect the gaming to perform during the recession well we have experience from the last Great Recession in 2007 and eight which showed that in a way gaming was resilient but that was actually the Golden Age of gaming where we had a lot of growth on PC console and the mobile started to appear right now we don't really know what to expect but uh I think we should be uh optimistic because uh from the current signals compared to other Industries we see a much lower slowdown than uh the rest of the industry Industries so what's the the general outlook for

the next five to ten years uh it's actually quite optimistic this is The Gaming revenue that's forecasted for the next five years and it's actually forecasted to be growing for more than 50 percent with the compounded annual growth rate of nine percent uh here's another chart from another company global data that also shows the same similar amount of growth in the next eight years where Mobile gaming will state as the ultimate front-runner of the gaming industry and uh another chart that also shows Mobile gaming growth that's expected to be between five and ten percent of the annual growth rate now let's look to the uh into the advertising uh advertising was always a bit erratic when it comes to its relation with the GDP growth so whenever there was a recession advertising uh well companies were cutting advertising spend that was one of the first thing that they were cutting which of course in my opinion as a marketeer wasn't the best thing and obviously afterwards uh the biggest winner that ever came out in

uh in the recessions were the companies that are not cutting advertising budgets too much uh currently uh in the last few quarters we definitely see a Slowdown even in on the digital channels uh which you can see here on the left side but the good thing is that they're still growing and then on the on the traditional marketing side which is television you'll see already a huge decline especially in the last quarter that show is also one Trend that's been happening for the last few recessions where people are shifting marketing spent from Brand uh uh brand channels towards performance channels where online marketing definitely belongs uh user acquisition in the last latest year or two had a couple of headwinds uh well starting for probably with the Privacy changes that were introduced by Apple more than a year ago which I guess you all heard of so you kept seeing those small ADT prompts which were limiting the user data to be shared with

us marketeers and that substantially increased the difficulty of doing marketing uh for mobile games because it increased the technical complexity measurement and a lot of other things but then there was also a huge shift of user Behavior after the first pandemic uh period so we saw after first lockdowns well first lockdowns were actually uh honeymoon for gaming but then afterwards came the the drop in recession drop in monetization and then paired with the macroeconomic factors that you saw uh throughout this year like a high inflation Rising energy rate prices um layoffs and other things gave us something to think about from the marketing perspective and then there was one overlooked thing which was the amount of Investments that went into gaming which from the marketing standpoint were not that great because it actually increased the competitiveness on the advertising networks increase the pricing which made

it a bit harder to Reef to achieve RI positive effects of our campaigns one thing that uh recession definitely brings is the uncertainty uncertainty of user Behavior uncertainty of the funding uh for our companies uncertainty in the in the marketing performance and I'm now going to give you a few tips how to reduce this uncertainty and go for the recession unharmed one of the things is kind of obvious we are we keep hearing that data is important data is the new oil for more than a decade but in recession that becomes even more important you need to invest in your analytics structure you need to invest in analytics systems that are ingesting your data because it's not only MMP data that you need to have but we all you know you also need to pair it with some other sources like SK Network

that's coming from IOS and you need to pair it with media mix modeling you need to constantly run experiments which puts a lot of focus on analytics there's some new techniques that you need to employ like media mix modeling which was mentioned and there are of course couple of Open Source tools that you can use like uh Robin from Facebook lightweight from Google and then some companies that are helping with incrementality and midi mix models now cash is definitely one of the most important things in recession so keeping the cash flow healthy making sure that you have enough runway for running your marketing activities and uh what that actually means is that you need to to be super diligent with the spend of your marketing spend to make sure that you're cutting uh ineffective campaigns and channels and then you're supplementing that with a lot of experimentations incrementality tests that you keep running to make sure that you're not cannibalizing uh other

channels with with the channel that you introduce by the way when I search UI channels I mean Facebook Google Snapchat and a lot of other networks plus the programmatic channels and once you find those profitable channels those lucrative pockets of traffic then you need to double down on them uh what usually happens in the recession is also the drop of consumer spending which uh is something that we usually closely monitor with LTV curves or well actually lifetime value curves which usually look like this so we we plot the monetization uh in the game by having uh a curve that shows how it progresses over days and weeks and months and what can happen usually during the recession that you uh prior to a recession you see a healthy curve but then a few months in you see a drop of monetization which implies that you need to change your marketing objectives and marketing goals and then later on it can go even worse

which means that you need to constantly recalibrate your models and make proper forecasts you can properly uh predict the market activities and funding for the future and what this actually brings is the extension of the payback periods so that means in practice that the money that you invest in in marketing is not going to get back maybe in six months but in nine months throughout the recession because implementization of the users is getting lower this is an example of uh one of the games that we were forecasting where a drop of just 15 of the average revenue per daily active user extended the paid back period period almost double from 180 to days to over a year or actually almost a year in practice that means that you need more funding more more financial Runway to run marketing campaigns because uh with uh oops

if you're just going bootstraps so if you're funding your UA Investments with the money that you keep receiving from your networks and app stores that can usually slow down your growth which means that you need to find Partners or other financial instruments to fuel the growth uh in in practice that means that you can uh if you're using uh Partnerships with Publishers or or credit lines or things like that you can accelerate your growth multiple times another way to successfully go through the the marketing uh for the macroeconomic uh downturns is to find the countries that are left less affected and we have yet to see what are those going to be in this recession but historically we saw for example that Scandinavian countries were a bit more recession uh resilient for example Australia also went for 25 years without any recession uh I'm also really bullish on this region especially Saudi Arabia with the

which is showing really fast growth in gaming and Good Financial reserves as a country so I've suck that will be also one of the countries that will go for recession relatively unharmed but what you need to do is to look into your data look into your player behavior and check those opportunities that you can still leverage to to grow your games one thing that you definitely need to do if you want to scale your games especially to the top grossing charts is to diversify your UA channels you can it's uh it's hard to run your marketing with only a few channels you need to go towards like 10 or 20 channels in parallel but to do that you need to meet three requirements first you need to have positive uh unique economics which in practice means that your cost per install is lower than your lifetime value of the user and then you have to have the budget so funding to run the marketing campaigns and of course you need to have UI capabilities to to

actually uh manage these campaigns if one of these requirements is not met you're gonna be in a situation where for example you have a budgets to fund the marketing good game with good uh product Market fit but you don't have capabilities in-house which means that you need to find Partners Outsource Partners or build the in-house capabilities which can often takes take like a six to 12 months sometimes you will have uh enough funding and good UA team but then the game won't support the growth because you simply don't want to have enough monetization and that's where you need to stop the campaigns and try to improve your game and then the third uh uh third uh variant would be to have a good game enough people in-house to manage the campaigns but not enough funding that's something I already mentioned I always suggest that you start with the basic QA channels like the the Facebook's inventory and then of course there's a big talk as one of the biggest

newcomers and there are also programmatic channels Etc but I don't want to go into details right now and then you need to pick your battles because at the end all these things paired together will mean that you have to uh manage a lot of things at the same time much more than in a period pre-recession which means that you need to pick the priorities for your team and make sure that uh you do some things really well and and from the product side that also means that uh you need to to focus maybe on the live games that are already producing good revenue streams instead of launching new games which is always more riskier uh in the today's gaming Market and last but not least you have to stay optimistic lack of optimism is usually one of the triggers of a recession and on the marketing side that means that if you are not optimistic you might cut your spend more than you should and that will impact your long-term growth

and of course you probably heard of the companies that were actually founded during a recession and grew like uh Walt Disney or Electronic Arts or lately in the last recession Airbnb and Uber and then I can also give an example of the last uh let's say a pre-recession period when the pandemic started where a lot of gaming companies actually slashed their budget and that really bite them in the ass later on because they were not writing that lockdown wave of uh audience and revenue growth so to summarize uh you need to make a foundation with your analytics system you need to make sure you cut the ad waste during the retention the recession and then also improve your Roi you need to keep an eye on the monetization patterns in your game uh you know you need to expect a lower consumer spend which will reflect in the slower payback periods you need to make sure that you have

enough financial runway for your marketing activities because uh otherwise you're not gonna scale you should try to find company countries that are less affected by the recession you need to diversify your marketing channels you need to pick your battles so prioritize the things that are really uh getting you into the right track towards growth and you need to stay optimistic and then for the last as I said we are also doing publishing so we have really seasoned team of many game experienced game professionals that have more than 10 or 20 years of experience in gaming so we can bring a lot of business expertise marketing expertise funding supporting services like localization QA all in the mind all with the gold to make sure that we grow together and uh that we hit those top Crossing charts thank you

that was generally brilliant that was a really really useful uh talk not just obviously focusing UA but about business strategy in in a recession we are in challenging times um I know she didn't feature the UK as a a really promising market so I'll I'll just take that I'll take that on board you're probably right based on the latest news it's not going to get there self-inflicted problems yeah um do we have any questions uh for rack out there we've got a we've got uh microphones and we've got a question to throw there was quite a lot of data in there is there one over there I can't see oh yeah she's off she's off hello Catherine I am thank you for the presentation so just a question so um you asked developers to partner with you are you sort of like an agency that takes uh like agencies usually take big developers with big budgets or are you like a platform where the developers maybe can supply their own content and

you can do like minimal consultations for like you know Indie developers with minimal budgets how does the how's your business model operate well we consider ourselves as a game mobile first game publisher and developer both games in the early stages but also the games that are already live so we have funds to to test the game first and then we if we see subtraction we are more than happy to invest in games invest in teams and help you scale up your your business thank you very much they've got a booth outside so you can go and chat and it's like any other questions we've got there's one no I kind of someone just oh there's a question over here to trapping a blue uh blue sweater okay sir wonderful wonderful conversation now although this is all focused mainly on the mobile game industry how is it do you manage to make sure that gains from other platforms say

PC PlayStation and whatnot is able to adapt according to your own I'll just explain yeah do you I guess I know you're a mobile games publisher predominantly but do you have any thoughts about the other genres or the other platforms with a PC and console are they going to suffer how can they deal yeah I see a similar situation for other platforms where gaming Mobile gaming because historically at least in the last decade has shown the strongest growth so that's where I'm most bullish on but uh I believe that there will be similar situation on on PC and consoles so there will be a certain decline but the long-term forecasts are optimistic so I think a lot what we're saying a lot of the advice Remains the Same about you know don't you know look at the path not traveled and not be optimistic but also keep an eye on cash flow right that's UA is obviously slightly different in in those platforms than it is in Mobile there's different approaches so is there any other any other questions okay fantastic I've got I've got one if

you had you you've come with a lot of tips there a lot of suggestions and I've made a few notes for my business so if you had one you know for a smaller certainly for small developers if you had one particular thing to be your absolute watch word in in slightly tougher Economic Times what would you is the one thing above all is it you know is it is it purely about Clash is it about monitoring you know your your UA analytics what's the most important of those things well most important is definitely to to to to keep trying I mean uh if you just get scared of the the economic environment and you try to wait that might be too late probably I mean uh gaming is still experiencing growth yeah uh in a way and then forecasts are good so I believe that you you should seize the moment and try yeah and even if you fail I mean it's still a great learning yeah fantastic so thank you very much actually thank you that brilliant

translation thank you sounds off of a massive beat out there so do go and see them and and chat chat yes we are we're just in front of uh there on the on the right side so please visit our boot for any other information that you might have [Music] [Music]