AUG. 3, 2015 • Tapjoy, Inc. has been making some noise of late regarding their monetization SDK as the premium option for freemium mobile developers. The privately funded firm has been strong since 2007 in regards to its mobile advertising network that fed in-game ads to iOS and Android devices. But a year ago, Tapjoy acquired an analytics firm based in South Korea, 5Rocks, which opened up a whole new line of business for the company.
There is no shortage of analytics firms plying their tracking services to game developers, yet Tapjoy maintains its platform is one of the most successful at predicting which users will purchase in-game versus those who will not spend money at all. From there, Tapjoy says its SDK can help freemium developers segment their user base and feed non-spenders different kinds of messages and promotions. To get an update on how Tapjoy’s services have evolved, DFC went to chief marketing officer Peter Dille.
DFC: Tapjoy then and Tapjoy now… can you bring us up to speed on what Tapjoy is up to now and how that has evolved over the years? How is Tapjoy’s business model different and expanded from where it used to be?
Peter: Tapjoy has always been focused on serving the needs of mobile app developers, but Tapjoy today is very different from the Tapjoy of 2009. Tapjoy today is a leading mobile marketing automation and monetization platform for freemium app developers. There are many single point solutions in mobile that offer ad monetization services, messaging, analytics, marketing automation, etc. Tapjoy saw a need to combine all of these into one product driven by a common dataset. Our mission is to help mobile app developers maximize the lifetime value (LTV) of every one of their users.
Since our inception, the company has been focused on helping developers monetize their apps– so that’s a current theme that carries through to today — but until last year, we did this purely from the ad monetization side. In fact, we pioneered mobile rewarded advertising and have helped generate more than one billion app downloads in our history. In July of 2014, we acquired a South Korean analytics firm called 5Rocks and have integrated their analytics capabilities into our platform. This combination repositioned Tapjoy as a complete platform for LTV optimization, by allowing app developers, through a single dashboard and SDK, to analyze and understand their users and use those insights to deliver the right message or rewarded advertisement to the right user at exactly the right time.
DFC: Game analytics is an ever more crowded and confusing space. How does Tapjoy compete with other analytics vendors?
Peter: When we acquired 5Rocks, we gained a best in class analytics solution –a leader in the analytics market across Asia Pacific markets and a perfect compliment to Tapjoy’s monetization platform. The combination differentiates Tapjoy in a number of important ways. Most app developers understand only too well that only a tiny minority of users actually spends money via in-app purchases. According to our data, it’s about 3.5%. But instead of trying to monetize the non-spenders via advertising, most developers elect to not even try because they don’t have a reliable way of segmenting spenders from non-spenders, or they are fearful of disrupting the user experience. Tapjoy’s platform and data science actually predicts who will be a spender in the future and who will never spend. We help developers put messages in front of users who have spending potential and for those that will never spend, we place a contextually relevant rewarded ad there instead. This personalized app experience allows the developer to maximize revenue from every user.
DFC: Please go into detail what services Tapjoy’s Marketing Automation and Monetization Platform provides.
Peter: Our Marketing Automation and Monetization Platform combines predictive analytics, marketing automation tools, in-app purchase (IAP) promotions and ad-based monetization in a single solution and dashboard that drives revenue and engagement for app developers. Tapjoy’s Marketing Automation and Monetization Platform includes market differentiators such as:
- Our predictive and actionable analytics that enable mobile developers to know and take action against the future value of every user. Tapjoy’s Future Value Map makes deep segmentation and real-time analytics actionable so developers can serve a nearly infinite variety of marketing actions that drive lifetime value.
- Marketing automation tools that instantly deliver contextually relevant messages to engage spenders, or rewarded advertisements to the users that will never spend.
- Real-time IAP and ad-based monetization are now available to developers from a single data set, in one platform. With Tapjoy, developers no longer need to integrate a variety of single point solutions and can focus on one SDK for all of their analytics, marketing automation and ad-monetization needs.
DFC: If I am a mobile developer, why do I want to use the Marketing Automation and Monetization Platform and how much will it cost me?
Peter: By combining an advertising tech stack and a marketing tech stack together in one SDK and one dashboard, Tapjoy allows developers to deliver a personal monetization solution to every user. Providing every user with a unique and personalized experience is key to maximizing LTV from every user. And to make it really easy, our entire platform is free when a partner monetizes with Tapjoy. So, whether a developer is monetizing or spending money on UA campaigns with us, they can tap into the power of our unique platform at no charge.
DFC: Can a publisher or developer work with Tapjoy for parts of its offering and still use other vendors for various components such as the actual in game analytics?
Peter: Yes. Developers can elect to use discreet features or the entire platform. We have some partners who started as ad monetization partners who are now adding the full analytic capabilities. And particularly in Korea and APAC, due to the presence of 5Rocks in those markets, we have developers who had been using analytics who are only now adding our monetization solution. One of the things we hear again and again from developers are they’d prefer to not have so many partner SDKs to maintain and update. We agree and are looking to provide a complete offering. We’ve received some really great feedback from our early adopters.
DFC: Does Tapjoy have a picture of the analytics/ad serving/user acquisition/services space for mobile games? Our sense is Tapjoy is spanning all of this now. Is it possible for Tapjoy to break out the different components of its offering and distinguish the major competitors in each area?
Peter: When you look at the landscape there are quite a few point solution companies out there that offer anything from ad serving to user acquisition, but they stop there. The same can be said for analytics and marketing automation companies in the market. They might have robust analytics offerings, but they aren’t tailored toward the freemium model, so freemium app developers have traditionally been forced to include a multitude of different solutions to parse together a full offering, when more often than not each solution doesn’t share data with the other.
Tapjoy, on the other hand, is in a very unique place in the market. We are optimized for freemium apps to deliver ad and IAP-based monetization, all of which is driven by a comprehensive analytic and marketing automation platform. We are able to use that comprehensive data layer to predict user behavior, and from the same platform drive smart marketing automation decisions. Some of the point solutions in the market include:
- Analytics: Flurry, Unity, MixPanel, Localytics
- Ad Serving: AdColony, Chartboost, Milennial, AdMob
- UA: Facebook, Fiksu, NativeX, Chartboost
DFC: Can Tapjoy comment about the evolution of the business models of its customers? In other words, for mobile F2P games people generally think in game purchases, currency purchases, MTX etc., followed by ads. In one sense you could try to simplify it and say X% of revenue per month for app ABC comes from MTX, Y% comes from ads and that is it. Is that simplification accurate? Has it changed over the years? What is Tapjoy seeing?
Peter: Well, as you might imagine, the approach and picture changes pretty dramatically from developer to developer depending on many factors, including how well the game monetizes via IAP, audience size and frankly the philosophy of the team and their strategy. But there’s a common thread everyone faces when dealing with freemium gaming, which has emerged as the de facto standard distribution model. It’s a great way to expose your game to the broadest audience quickly. But, at the same time, the reality going in is the vast majority of users will never pay you a dime for the content you’re creating. Consider that across our network of more than 200,000 apps, we see less than 5% of players monetize though IAP. In fact, that number is over the lifetime of the app. On any given day, it’s less than 1.5%!
Developers with hit games or games that monetize really well can afford to live with this and not worry about adding advertising because they’re making a great return from their whales. But frankly, most developers aren’t so lucky – they need ad revenue to augment their IAP earnings and lift the overall LTV of their users.
And for those games that are running ads as well as driving revenue via IAP, the general rule of thumb split we see is about 60% to 70% of a pub’s revenue coming from payers, with the balance coming from ad monetization.
But again, the only way you can optimize the LTV of both spenders and non-spenders is when you look at the performance of your app through a combined platform with one dataset… and the results are significant. Since releasing the new Tapjoy platform earlier this year we’ve seen that developers who use our solution to drive targeted marketing automation messages to spenders have seen a 56% lift in overall IAP average revenue per monthly active user (ARPMAU). But it’s not just the IAP revenue that goes up, because the platform also isolates non-spenders and monetizes them via rewarded ads. And therefore, we’re seeing that ads combined with IAP promotion can double developer’s average revenue per daily active user (ARPDAU).
DFC: Tapjoy seems to be very well funded given acquisitions you have made and developer programs you have run over the years. Investors we have noted include: J.P. Morgan Asset Management, Rho Ventures, North Bridge Venture Partners, InterWest Partners and D.E. Shaw Ventures. How much capital freedom to operate does Tapjoy have? Is Tapjoy profitable?
Peter: Our board and investors are very bullish about the opportunity for Tapjoy and are committed to Tapjoy succeeding.  As a private company we don’t disclose all aspects of our financials or details on profitability. But I will say we are extremely well funded with a huge global reach in excess of 520MM, and revenues in excess of $150MM. We still see tremendous upside in the market and are focused on delivering a unique solution to developers which also provides a better mobile ad solution to brand advertisers.
DFC: Peter, you have been with Tapjoy for close to four years now. What have you learned and how is it different from SCEA or THQ?
Peter: I was attracted to Tapjoy because I sensed that consumers were shifting to mobile and I was eager to make that shift, too. I don’t think it’s an exaggeration to say that the consumer adoption of smartphones, tablets and the associated disruption to content distribution via freemium apps is one of those once in a lifetime opportunities for a marketer.
In my previous experiences with gaming content – which I’ll always value, by the way – you’d publish a game and then wait weeks or maybe even a month for sell through data to try to understand what’s going on in the market and what consumers think. It really wasn’t that long ago in actual years, but honestly feels prehistoric now. With mobile, everything is instantaneous and everything you do is driven by data. So the minute a game launches, there’s deep data and feedback to respond to and there is robust opportunities for A/B testing. Plus, marketing automation technologies are fascinating.
So those to me are the biggest differences – it’s down to a shift in consumer behavior and the implications on marketing insights made possible by the technology. And being at a company that’s working on innovating in mobile advertising as well bringing that together with analytics and marketing automation is a lot of fun.
