In the online monetization industry, the standard metric used to evaluate performance is CPM. The basic definition of CPM is “cost per thousand impressions”, which means for every 1000 visitors you receive to your payments page, you should be making your calculated CPM, where CPM = (total revenue)/(total impressions) x 1000.
(Ever wonder, by the way, why the abbreviation is “CPM” when “thousand” begins with a “T”? “M” is the Roman numeral for 1000, as in Latin, “thousand” = “mille“.)
There’s a debate over whether CPM is really the best evaluative metric, but in any case, as long as it’s the standard number used to measure success, it’s good to have a better understanding of the many factors that affect CPM. There are two categories of factors– those controllable by the developer and those not. For now, let’s just look at the first category, which includes demand for currency, engagement of the game, and retention of the game.
Demand for currency
Is the game designed so that users want or see the need for purchasing currency (and again, “currency” and “virtual goods” are interchangeable as terms for the end goal)? Last week, it was discussed how virtual goods need to provide value to the user’s experience in order to be in demand– the more valuable those goods are to the game, the more currency users will purchase in order to obtain those goods, and the more revenue a game generates, the higher the CPM will be.
Engagement of the game
How long are users staying on the game each time they visit the site or application? The more time users spend immersed in the game environment, the more active they are and the more likely they will be to visit the payments page and participate in a monetary transaction (either through direct payments or offer completions). By designing a game or community that really appeals to its users, those users become more willing to invest in that game. No one wants to spend money on something they have only mediocre feelings about.
Retention of the game
Do users consistently come back, or do they play once or twice and never return? Similar to above, a game that holds more long-term users will have higher CPMs, since long-term users will be more invested– either in time or money, or both. It’s a self-perpetuating cycle: the more a user plays, the more likely that user will be to purchase currency to progress in the game, and the farther along in a game the user is, the more likely he or she will be to return and keep playing.
Because it generally takes new users a certain amount of game play before they can see the value or feel the need of purchasing currency, a game that always has only new users will never see the consistent stream of revenue activity that longer-term users would produce.
**********
These are all elements directly under the developer’s control that can be adjusted to ensure that CPMs are maximized: Make your currency valuable so that users are always willing to buy more (a user who purchases currency only to find very little benefit to having done so will not be likely to purchase currency again in the future). Make your game engaging so that users like the game enough to not mind putting money into it. Focus your game strategy on long-term play so that your users who have finally reached the stage where they see the value of buying will keep returning.
The other major factors that affect CPMs include a game’s demographics (in particular user age groups, gender, and country) and, if offers are used as an alternative payments option, advertiser errors. Look for next week’s analysis piece to see the breakdown of these factors and what developers can do to best handle them.
0 Responses
Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.