Google Online Marketing Challenge MS&E235 Internet Commerce Hey Buddy Software Liar s Dice iphone Application June 2009 Group Members: J. Benjamin Hernandez- Brito jbhernandez@gmail.com Li Liu stflily@gmail.com Paul Jones paulsjones@gmail.com Farnaz Ronaghi Khameneh farnazronaghi@gmail.com
MS&E235 Internet Commerce Page 2 of 10 Table of Contents 1. INDUSTRY COMPONENTS... 4 INTRODUCTION... 4 CAMPAIGN OVERVIEW... 5 OPERATIONAL DETAILS... 5 CAMPAIGN STRATEGY EVOLUTION... 6 KEY RESULTS... 6 CONCLUSIONS... 7 FUTURE RECOMMENDATIONS... 7 2. LEARNING COMPONENTS... 8 LEARNING OBJECTIVES & OUTCOMES... 8 GROUP DYNAMICS... 9 CLIENT DYNAMICS... 10 FUTURE RECOMMENDATIONS... 10
MS&E235 Internet Commerce Page 3 of 10 Executive Summary Campaign Overview We advertised for a newly released iphone game, called Liar s Dice. Our primary goal was to drive targeted traffic towards our partner s game landing site in hopes of converting page views into app sales. Key Results At the end of our campaign, we achieved a 0.05% click-through rate with 1,885,393 impressions and 1,001 clicks. Our average Ad position during campaign was 2.9 and our average cost-perclick was $0.20. On many keywords we received top Ad positions but keyword search traffic was not high enough. Our competitive keywords included liar s dice game, iphone game, entertainment games and so on. We had two main types of Ad groups, general and specific. Since most iphone apps are discovered through the itunes App Store, our campaign was targeting the smaller market segment that uses search engines to discover new mobile apps. As a result, many of our narrowly targeted keyword campaigns did not receive enough search volume to result in a significant number of impressions. Our general keyword campaigns performed better in terms of click-through rates and in many cases dominated conversion rates of more specific campaigns. You can see that during 3-weeks of campaign we could achieve a roughly increasing clickthrough rate and decreasing cost-per-click. Our low CTR at some point is because of the high number of impressions versus low number of clicks in content network. Because of the gaming nature of Hey-Buddy product, content networks proved to be more effective in terms of cost per conversion. Conclusion Our campaign started on May 1 st but due to product development and App Store approval delays, the product was not available for sale on the itunes App Store until May 11 th. 104 games were sold at the end. From the site traffic data and online chatting with people on the game we can roughly say that a high percentage of this amount was because of our online advertising. Except for the developer s word-of-mouth, no other marketing effort has been done for this game. If we take all games sold into account we can say that our advertising resulted in profit for Hey Buddy Software Company. Future Online Marketing Recommendations We recommend that Hey Buddy Software continues to refine their AdWords campaigns in an attempt to drive the cost per conversion consistently below the proceeds from a game sale. Based on our limited time span, we observed profitable campaigns on certain weekend days. Minor tweaks to the existing campaign strategy might lead to a cost effective use of AdWords in the future. In parallel to future AdWords experimentation, we recommend initiating a campaign on advertising platform focused on mobile devices such as AdMob which may provide a more costeffective channel for Hey Buddy to market their products.
MS&E235 Internet Commerce Page 4 of 10 1. Industry Components In a survey of 1,100 AT&T wireless customers, 57% said that they play games on their mobile devices 1. The survey also showed that more than 50% of people reported that they played video games as a distraction from life issues, while 40% chalked it up to relaxation and stress relief. Furthermore, the survey also found that mobile gaming sessions tend to be on the shorter side 91% last for 30 minutes or less in duration, with 62% lasting 15 minutes or less. With respect to frequency, 60% of gamers said they play games on their wireless devices at least once a month, with 40% reporting that they play weekly. When compared to traditional computer games, mobile games tend to become more of a pastime, especially for people who are not ardent game players and just play occasionally. A separate survey by the Multimedia Research Company (TMRC) 2 has identified the iphone as the most successful platform in the mobile games industry, with 71% of an expert panel labeling it the most successful development platform or operating system. Nonetheless, there is plenty of competition in place with similar games offerings at the Apple store. Introduction Our partner for the Google Online Marketing Challenge is Hey Buddy Software 3. This is a startup company developing game applications for Apple s mobile devices products. Their first product is an online multiplayer implementation game of Liar s Dice that works with the iphone and ipod touch. iphone applications are sold online through the Apple store. Customers mainly search through the Apple store interface to find these applications. Facilities like querying for the top twenty applications makes it easier for people to find the latest high quality applications. Due to the low CPC for keywords like iphone, we expected that Googling for iphone applications is not the most common means of discovering new iphone content. 1 PRNewswire May 4, 2009 http://www.reuters.com/article/pressrelease/idus106618+04-may- 2009+PRN20090504 2 http://www.gamesindustry.biz/articles/iphone-most-successful-mobile-games-os 3 www.heybuddysoftware.com
MS&E235 Internet Commerce Page 5 of 10 Campaign Overview By focusing on geographies, gender and age groups where iphones are already popular, Google AdWords was an excellent targeting vehicle to meet our goals. The key metrics we set out to track to measure our performance include, METRIC GOAL Conversions 25 CTR 3% - 5% Average cost per keyword $0.25 Number of impressions 40,000 Number of clicks 1,500 Table 1 - Our Team s Initial Goals In order to attain these goals, we started by experimenting with different keywords to determine the best performers. Initially, we set our bids a bit higher than anticipated and then lowered our bids as needed. This helped us determine the optimum bidding for best ad positions. It is worth noticing that some of our initial goals were not correct given our inexperience with the online advertising industry. Operational Details Although our partner had originally planned to launch their product on May 1 st, due to deployment issues and approval delays, it was not available on the itunes Store until May 11 th. By the next day, there were already 250 user profiles, most of which were due to piracy. We set our daily budget at a pro-rated amount so it would last us until May 21 st. Taking into account our operational expenses only, our campaign lost $6.46. Expenses $288.31 Adwords Campaign $203.75 Apple's Commission (30% of Sales) $84.55 Revenues $281.35 89 Games sold $3 ea. $267.00 15 Games sold $0.99 ea. $14.85 Profit ($6.46) Table 2 - P&L Statement
MS&E235 Internet Commerce Page 6 of 10 Campaign Strategy Evolution After experimenting with different keywords and ads, we determined the keywords that gave us the most impressions and clicks were free games, mobile games & online games. At the same time, we also found out that our ads were occasionally rejected in 1 or 2 days when using trademark names like ipod, itunes & iphones in the ad copy. We learned that for our low cost product, the content network was a better advertising vehicle than the search network. As we went through this learning curve, the effects in our campaign were that iterating on successful campaigns with incremental improvements. Once we found a winning combination we focused on it and tried to optimize it by placing the ads in different platforms like social networks, mobile game related websites and others. Key Results As noted earlier, the content network offered us the best advertising alternative as the cost per conversion was lower when compared to the search network even though the CTR was worse. Figure 1 - Cost per conversion comparison Hey Buddy Software notified us that there were 104 games sold by May 30 th, out of which 89 were sold at $3 and 15 at $0.99. As far our campaign went, our ads average position was 2.9,
MS&E235 Internet Commerce Page 7 of 10 average CPC $0.20 and average CTR 0.05% (including the content network). Some of our best ads were highly targeted, delivered a good CTR, however, they had some trademark issues. Figure 2 - Sample ad with good CTR & trademark issues Conclusions Given that our ads were viewed 1,192 times in 5 continents and that 10% of these impressions were on itouches and iphones, perhaps an ad platform that specialized in mobile devices would be a more relevant advertising channel. Also, advertising one low price product as opposed to a collection of game titles was more challenging than we anticipated and the conversion costs were very close to the proceeds generated from a game sale. Compounding this effect, it was apparent that piracy affects every software company. Lastly, AdWords keyword tool revealed a relatively low competition and recommended bid for the keyword iphone Games which indicates that it is not common within the mobile game industry to use Google AdWords as a primary online advertising vehicle. Future Recommendations We recommend that Hey Buddy Software to continues advertising on Google AdWords and experiment with limiting ads to weekends (our limited data set indicated that weekends provided better conversion rates) and perhaps specific times of day. Given that Google does not have enough search information for iphone-related keywords shows that Google Adwords may not the best place for advertising iphone Apps. We believe that AdMob could be a more effective channel for advertising mobile Apps. Hey Buddy Software plans to release a free trial version of Liar s which should help build a larger solid user base and increase the viral marketing efforts eventually resulting in more sales of the full version. Finally, using AdWords requires an iterative approach and careful monitoring of CTR and more importantly cost per conversion.
MS&E235 Internet Commerce Page 8 of 10 2. Learning Components Learning Objectives & Outcomes The team s learning objectives were divided into two areas: Was AdWords an effective advertising model for a low cost mobile application? What does it take to build a profitable iphone App? The team learned that it is possible to design an AdWords campaign that with a cost per conversion that is less than the profit contribution per transaction if the campaign is carefully tuned. One campaign had a cost/conversion of $1.83 on a particular day and the profit generated by an app sale was $2.20. However, the 30% commission claimed by Apple on all transactions keeps profitability in a delicate balance. One of the unexpected outcomes during the contest was that in order to spend the $200 budget in our 3 week time frame, we had to rely on the high impression volume from the content network because there was not enough search traffic for the keywords that were most relevant to the Liar s dice game. Even with a high quality score and high bids, it was difficult to get enough impressions to spend the daily budget. This challenge was to some extent caused by the restrictions on trademarked keywords such as iphone, itunes, and ipod because those were some of the most relevant, highly targeted keywords for our product and ad copy was frequently rejected due to trademark restrictions. It is understandable that Apple would not want competitors to misuse their trademarks but the team was surprised that truthful ads that would result in increased iphone app sales would be rejected. Figure 3 - Rejected ad due to trademark issues With regard to learning about what it takes to launch a successful iphone app, our team realized that there is a tremendous amount of competition and there is a high chance that the initial
MS&E235 Internet Commerce Page 9 of 10 development costs will not be recouped. Since the barrier to entry for an iphone app developer is only the $100 Apple registration fee and the cost of a MacBook for development, there are many apps to choose from in each category. When the Liar s app released on May 12 th, 2009 there were already over 160 other games on itunes App Store in the Dice Games category with over one thousand others in the Casino and Card Games categories. Figure 4 - Competition at the itunes App Store Group Dynamics The academic quarter system moves quickly so forming an effective team can be challenging. Additionally, two of our team members are remote students and the other two are on-campus students. We introduced ourselves initially through Facebook then we selected a project topic and coordinated efforts using conference calls, Gmail and G-Talk. Our first in-person meeting was the day that we presented the project results to our classmates on the last day of lecture. While this method of being introduced to co-workers/classmates is sub-optimal, we were able to accomplish our tasks efficiently and form professional relationships that will live on after we take our final exam for our Internet Commerce course.
MS&E235 Internet Commerce Page 10 of 10 Client Dynamics Hey Buddy Software was transparent with their objectives and was receptive to feedback from our team. We enjoyed partnering with them but the excitement of introducing the product was somewhat dampened by issues that have plagued many new software companies. The Liar s game was their first product and the development team underestimated the effort required to build the product using an unfamiliar toolset. The original estimate to create the game was 2 months and the actual duration was 11 months so the market has become more competitive in that time. Several other disappointments deflated the hopes for a wildly successful launch including some scalability bugs that caused delay, initial rejection and approval delays from the App Store due to minor cosmetic issues, and pirated copies of the game outnumbering paid copies 10 to 1 on launch day. Future Recommendations During the contest period because we set out to spend the entire $200 budget, most of our credit was spent on clicks coming through the content network where the conversion rate was fairly low. In the future, Hey Buddy Software could maintain a campaign that is much more narrowly targeted that would have a better cost per conversion and lower spend rate even if the click volume was much lower. Our advice to anyone developing applications for iphone is to get a minimum viable product submitted to Apple as soon as possible so that you know whether it will be approved before investing too much in the development effort and you beat the rush of competition that is sure to follow. Let the user base drive new features and enhancements in follow-on versions. If app sales alone are not sufficient to recover the development costs, considering a partnership with a company such as AdMob that could provide supplemental revenue through in-game advertisements.