Segmentation for Gaming Apps

Matthew Kloss | December 3, 2020
Strategic Account Executive

Segmenting your audience effectively is one of the most important components to a successful mobile retargeting strategy. 

Don’t get me wrong, effective user segmentation is key for user acquisition as well. But many mobile marketers can overlook the power of user segmentation to retarget and re-engage their existing audience to drive revenue.

For mobile games, segmentation is incredibly important given the expansive growth of new users and engagement in mobile gaming in 2020. Mobile game marketers should look to retarget the users they acquired earlier in 2020 to drive revenue.

The Mobile Gaming Gold Rush Is Not Over

Mobile games revenue surged this year, due to the global COVID-19 pandemic and resulting lockdowns. For comparison: mobile games spending grew 17.5% from Q1 to Q3 2019 to $46.7 billion. Mobile games grew by 25.7% in 2020 during that same period to approximately $58.7 billion.

This boost in player spend is no surprise given the relegation of more consumers to their homes seeking entertainment. 

Source: Sensor Tower

Embrace Segmentation 

Segmentation can take one of two forms. You can either segment based on user engagement. Or, you can segment based on monetization. Gaming apps tend to segment by monetization: dividing users into payers or non-payers. In other words, people who spend money in your app and people who don’t spend money in your app.

Once you’ve done this basic grouping, divide each group into 3 additional groups: active users, recently lapsed users and churned users. Here’s a quick rundown of each:

Users who have made a purchase:
  • Active Paying Users: Anyone who has ever purchased an item in your game and consistently records sessions in your app.
  • Recently Lapsed Paying users:  Paying users who have not logged in for a certain number of days, but used to log-in regularly.
  • Churned Payers: Previously paying users who have stopped playing your app and/or uninstalled your app.

Users who have not made a purchase:
  • Active Non-Paying Users: Players who have never purchased anything in your game but record sessions in your app.
  • Recently Lapsed Non-Paying Users: Non-paying users who have not logged in for a certain number of days, but used to log-in regularly.
  • Churned Non-Paying Users: A user who has never made a purchase and has stopped playing your app and/or uninstalled your app.

Love the Users You’re With

An overarching mistake marketers often make is overlooking their active paying users when they build their retargeting strategy. Yes, this sounds completely obvious but believe us, it happens

Users that fall in this category are also known as the ‘Day 0’ segment. In other words, users who have lapsed 0 days and are actively playing your game. Often, marketers overlook this segment thinking they don’t need to target this group of users since they’re already active. Instead, they aim to retarget recently lapsed or churned users. 

Let’s use a dating analogy to rewire your thinking on this: why chase after the partner who’s just not that into you? If Crosby, Stills & Nash taught us anything, it’s that you should love the one you’re with. Your active paying users are your soulmates. As such, give them the love (and ad spend) they deserve. 

This sounds straightforward, but many marketers get hung-up on trying to convert non-purchasers into purchasers, or lapsed non-purchasers into active purchasers. 

Generally, users are either going to spend money in your app or they’re not. In fact, the vast majority (95-97%) of mobile game players will never buy anything in a game app. Why waste valuable ad dollars on these users when you have a better shot at convincing the other 3-5% of players to make a purchase?

Segmentation of Active Paying Users

Since we’ve decided to only focus retargeting dollars on reengaging active paying users, let’s segment them further:

Reluctant Payers (2.5-4%): As Eric Seufert notes, these users are “value buyers”. They love a deal and respond to discount sales and combination bundles. These users typically make a purchase mid-game that helps them resolve a pain point. The key is to convince them they’re resolving said pain point at a value. That said, flash sales and discounts are the way to consistently incentivize these users to make in-app purchases.

Enthusiastic Payers (0.5-1%): The speed at which a player makes their first purchase and the value of that purchase will help you evaluate whether they fall into this group. These users will make purchases anytime they hit a pain point in a game. Make sure you serve them a steady stream of opportunities to make purchases. It’s also a good idea to focus on new content with these users: one-of-a-kind items and special upgrades.

A Note on Engagement Segmentation

We have been chatting about segmentation based on monetization (i.e. non-paying versus paying users). But, marketers should also consider segmentation based on user engagement.

Engagement segmentation can be a highly effective tool for driving revenue. The more a user plays a game, the higher the likelihood they’ll see value in making a purchase. That said, if you’re not engaging your players, they won’t see value in sticking around and making in-game purchases. 

This type of segmentation entails categorizing players by the content they’re engaging most with. From there, you can serve them more of that content and build strategies to monetize their interests.

Takeaways

Segmenting your audience effectively is one of the most important components of a successful mobile retargeting strategy. For mobile games, segmentation is even more important given the expansive growth of mobile revenue in 2020 ($58.7 billion so far). Mobile game marketers should look to retarget the users they acquired earlier in 2020 to maximize this growth.

  • Segment your users based on monetization value: paying users and non-paying users.
  • From there, focus on the 3-5% of users who make purchases in your game.
  • Keep in mind that engagement rates can also be a key to effective segmentation. The more a user plays a game, the higher the likelihood they’ll see value in making a purchase.