This week I have interviewed one of my former colleague in the user acquisition team to learn more about the strategy on advertising our own game in other platforms. Basically the other side of the story.
What I have learned is that the strategy is mainly about how much risk you are willing to take to grow your game. It all starts with a foundation curve of LTV. The most fundamental aspect of calculating LTV is the cumulative ARPU - measuring the amount of money you can get over the life time of an average user.
The growth of the LTV curve highly depends on the by-day retention of a game. Say a Hyper-causal game that only has $5 LTV until the curve flattens out, it doesn't make any sense to spend more than $5 CPI on a channel to acquire a user since it will not make any money.
If my game's LTV is still growing after 3 years, the usual strategy is to think about how much to spend vs. how much risk and growth I am willing to take. For example, if I do a 60 days payback strategy (60 day value = $10) on the 3 years $30 LTV game I've mentioned, I can only acquire users with $10 CPI with low risk and high profit per user over time. However, growth would be suffering since I can't acquire that much user with $10 CPI. On the other hand, if I do a 2 years payback period, I can spend $20 CPI, which allows me to buy a lot more users but I am also taking more risk at the same time and earning less per user.
In the end of the day, LTV is king. It controls how much you can grow a game and also how much and how fast you can regain those ad dollars spent.
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