Are You Willing to Share Your Data to Beat Angry Birds?

JANUARY 20, 2016 • Blog Post • By Atlantic Re:Think

IN THIS ARTICLE

  • To tap the potential of the freemium model, mobile game developers have turned to data analytics, real-time testing and other tech tools to find out what holds a user’s attention, builds loyalty and prompts the “buy now” impulse

How developers and data analytics are turning the impulse to buy into a digital reflex

It’s a familiar fork in the road: You progress to a new level in some game you’re playing only to come up against a prompt to purchase something—a ticket, a new weapon, a bag of coins. That leaves two questions: 1) Would you pay for it, if only to better distract yourself from a commute or to improve your chances to win? And 2) if not, what do you need to be persuaded?

If you answered yes to question #1, you’re part of a trend in mobile commerce that goes far beyond gaming.

Most of us now expect mobile and desktop apps to be free, at least initially, with expanded services costing additional fees. That’s the “freemium” model, which now dominates the market for apps, popularized by companies such as Spotify, Hulu, LinkedIn and Dropbox. Ninety-eight percent of the revenue flowing into app stores now comes from freemium offerings.

“Providing content and lowering the entry threshold by not charging something up front gives people a way to test something out without having to spend money,” says Niklas Herriger, CEO and founder of Gondola, a firm that develops pricing for specific app and user segments based on a proprietary algorithm.

That leaves question #2—and so far, most people need more persuading. Only 2 percent to 5 percent of all players spend any money at all within mobile games, according to marketing firm App Annie. And only a third of consumers under 26—the age group most willing to pay for digital content—have started paying for digital videos and music, according to a 2015 media report by Bain & Company. Those kinds of numbers suggest, among other things, a lot of room for growth.

A data-driven impulse buy

To tap the potential of the freemium model, developers have turned to data analytics, real-time testing and other information-technology tools to find out what holds a user’s attention, builds loyalty and prompts the ”buy now” impulse. Determining when to ask users to pay, which used to be a matter of trial and error, has become a mathematical-statistical discipline—especially as more free digital content draws a growing audience of consumers whose purchase behavior can be sampled. ”The core underpinning of any freemium model is very rich data”, says Steve Collins, founder of Swrv, a mobile app testing and optimization platform. ”You try to generate as much information as you can”.

Without gathering highly personal details, data-analytics engines can mine smartphones for their geolocation, device type and vintage (Android, Windows or iPhone, old or new), as well as such behavioral data as when we log in, how long we stay and, crucially, at what point we get bored or frustrated and leave. That data alone makes it possible to target specific users, determine what time of day to send out a push notification and simply make an app more engaging.

In pre-freemium days, developers released a mobile product in final form, once it had been perfected. Now they launch products in beta, then turn out a continual flow of releases and updates based on feedback from collected data. Combined with real-time testing, analytics can tease out what exactly users are willing to pay for, whether it’s a wizard who can get you to the next level, a personal diet coach to go with your fitness tracker, unlimited articles or streaming music with no ads.

Impulse-buying a unihorse

Because games have the largest installed base in the app store, the rich data and testing feedback they provide have become the developers’ best allies in creating successful transactions inside all mobile applications. They have taught developers about the uses and virtues of micro-payments, for example. Crossy Road, the smash-hit endless-runner game, has had 115 million downloads since its launch in November 2014 and has sold untold numbers of cutesy avatars for $.99 each. ”People latch onto the character that they like best”, says the game’s co-developer Matt Hall. ”Whether it’s the unihorse character or the penguin character, they share it, compete with it and talk about it. Crossy Road works on a sort of word-of-mouth level.”

Since it makes the bulk of its money from well-placed video ads (users earn coins for the game by watching a short clip), it also works if you don’t buy anything at all. ”Crossy Road isn’t a game that you want to play forever, but it makes sure it’s a game that you want to play for a while”, says Hall. ”In our model it’s important that retention—the number of people coming back tomorrow—is as high as possible”.

That Amazon-like emphasis on audience-building over immediate profit positions Crossy Road to collect more data on more users, which gives them the insight that could convert mere players into customers.

The missing piece of the mobile-commerce puzzle is what Collins calls ”frictionless payment”. While consumers are getting more comfortable with payment through devices, he says, the world of digital commerce is not yet at the point where they can get what they want in an instant, with a single click of the smartphone or by waving it over a card reader, secure in the knowledge that their personal data will not be compromised.

When that day comes, mobile apps will offer the ultimate impulse-purchase platform, says Collins, ”We want to get to a point where we can say, I just want to buy that. I just want to experience that movie now. I want that app now. I want that game today. That’s what the mobile experience is starting to deliver”.

 


 

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