Older users mean higher average revenues per paying user, but what if your entire userbase consists of your CTO’s mom and dad? Younger users flock to your community in hordes, many of them willing to try out their first offer in order to earn your virtual currency, but their limited incomes mean they’ll never whip out their VISA platinum and start buying up your currency left and right.

Previously, we published  an article looking at average revenues per paying user by age clusters with blogger and entrepreneur Andrew Chen.

It’s always good fun to look at data, but given these revenue discrepancies between older and younger users, what’s a developer to do?

This week, we followed up with 3 tips for monetizing social game users.

From the full article:

Get Them Young: 3 tips to monetize younger users

1. Think volume. Look for the users who are transacting the most, and then make sure you understand exactly who they are (and how they might be changing). For example, today your revenue may be driven by a massive group of teenagers, but what will happen when those teens become 20-somethings? In this series, we explored this question by age, but you’ll also want to think about geography, language, and gender. ‘Think volume’ means:

• Mind your game. If your product is subpar, you shouldn’t expect amazing volumes or revenues, no matter how much you…
• Focus on growing traffic through virality. How can you make your game even more social, more addictive, and more spreadable?
• Get users to complete. Users are 3 times as likely to make additonal payments if they’ve completed at least one offer.

2. Hold on to your users. People of all ages get tired of games easily. The last thing you need is a poor user experience to push users over the edge and straight into the database of a competitor. Do certain offers just rankle your userbase (leading to poor conversions, bountiful complaints, and churn)? While your payments solution’s algorithms will help you find the best offers for your users, there are always going to be a couple that just don’t perform. ‘Hold on to your users’ means:

• Pick out and remove underperforming offers, either individually or by offer category, and address customer complaints. For example, ‘adult’ offers may not work well if your game’s users are primarily 13-17 year olds.
• Diversify your product(s). How can you enrich a single game to be more complex and engaging? How can you offer more complementary games so when a user defects, she defects to another game in your suite?

3. Keep your eye on empty spaces. Yes, Facebook is huge. Yes, Zynga is dominating. But, growth potential is everywhere still. As more users of all ages sign up for their first Facebook accounts, more people pour into the virtual economy. As Facebook grows in locales outside the U.S., so do the games and apps that inhabit its ecosystem. As users get tired of specific games, they’ll start looking for other places to spend their time and money. They’ll probably invite their friends, too. ‘Keep your eye on empty spaces’ means:

• Don’t make a play just because someone else is making bank off of it (for now). Today’s leaders got there because they kept their eyes on empty spaces and filled them, quickly.
• Look for under-monetized user groups. How well is your game doing with young males? Can you work in a way for more of these users to complete their first offer (and open the door to additional payments)?

These should be your main considerations:

Growth
What does the growth trajectory look like for young users? How many of these users are already playing games, and how many more aren’t? The online casual games industry is still young and has plenty of room for growth.

Facebook boasts 300 million active users, with almost a third of these in the U.S. Since the entire population of the United States is just over 300 million, that means approximately half of all U.S. internet users, or a third of the entire U.S. population, are on Facebook.* Facebook counts 70% of users as having ‘engaged with a Platform application,’ meaning that most users have loaded an app of some sort at some point in their Facebook time. Judging by the impressive monthly active uniques the biggest developers are enjoying (51MM for Zynga’s Farmville alone), it seems that games have already taken off on the network. With all this, is there still room to grow?

Yes. Here’s why:

• Facebook has saturated the U.S. market, but that doesn’t mean every Facebook user is playing a game. Yet.
• The U.S. isn’t the only country in the world, either. In terms of Facebook traffic growth rates, the U.S. doesn’t even make it into the top 10. As other economies (real and virtual) catch up, markets around the world should start looking more and more promising for developers looking to monetize.
• People get tired of games. One developer’s churn is another developer’s new user.

As mentioned above, younger users contribute the lion’s share of total revenue for virtual transactions – for now. However, Facebook reports that the 35 and up group is their fastest growing demographic, so will we see this shift reflected in game usage and monetization too? Probably. But until the older users reach critical mass on the network, would you rather be competing hard for the same handful of housewives or slyly going for the many younger users at lower ARPPUs and massively higher transaction volumes?

Changing ARPPUs
Do ARPPUs change as users get older? Will your 15 year old user be worth more after she turns 18, gets a better job, and starts opting for direct payment over offers? We know that the typical 18 year old makes you more money than the typical 15 year old, so from this we might guess that it will pay off to hold onto that user as she ages.

Age     ARPPU
15     $2.65
18     $2.92
22     $2.82
25     $2.99
29     $3.33

Older users
Should you try to grow your older userbase? As just mentioned, Facebook’s fastest-growing demographic is the 35 and up set. While actively trying to acquire these users (over others) may divert your resources in ways you can’t afford, it’s likely that your game will indirectly absorb the benefits of Facebook’s demographic growth anyway. If everyone else is focusing on winning the middle-aged housewife segment, would you be better off stealthily (and expertly) acquiring the forgotten younger users? Try it. Measure it. Report back.

Conclusion

In parting, don’t buy into a ‘must do’ (eg. housewives) just because it’s popular today. Popularity doesn’t mean it’s wrong, but it does probably mean that lots of other developers are out there thinking the same thing as you. Instead, look at the data and focus your work where the greatest opportunity currently blossoms. Right now, that’s users who are in their teens and mid-20s.

If you’ve been targeting and you’re seeing interesting results, please share in the comments. What’s worked for you, and what would you do if you were a new developer just entering the marketing today?

• Age (and ARPPU) ain’t nothing but a number: Data on how impacts social gaming monetization
• All NEW Way To Engage Users, Grow Revenues: Say Hello to Gambit Tasks
• F-ck your offers! Game-ending user complaints & 3 developer solutions