There are 3 key factors that advertisers consider when choosing a user acquisition channel for video game marketing: cost, reach and users quality. Game publishers face significant challenges with each of them.

‍Cost

As top companies spend millions on marketing, creating awareness for games is becoming increasingly costly. According to the Fiksu Cost Per Loyal User Index rose from $2.10 in December 2014 to $4.23 in December 2015, demonstrating an increase of 101%.

CPIs are also increasing with 25% year-over-year growth for iOS and 144% for Android.

Reach

The way an auction system operates, the higher the volume of users an advertiser wants to drive, the higher the price it has to pay per install.

Therefore, if a competitor targets the same users and bids higher, it wins access to the audience and leaves less traffic available for other advertisers. The goal of any UA strategy is not to simply bring in new users, but to acquire engaged players who will monetize.

With a limited supply of targeted traffic for each particular game genre, it becomes challenging to acquire a meaningful quantity of targeted users.

Users Quality

While acquiring users at scale and meeting target CPAs are important, the goal of any user acquisition strategy is not to simply bring in new users, but to acquire engaged players who will monetize, refer a game to their friends, and remain engaged long enough for the advertiser to make a profit.

The cost-per-install quoted by networks doesn’t always reflect the quality of users. For example, a particular ad network may be good for one genre, but a failure for another.

Performance analysis in the free-to-play realm should always go beyond game download conversion rates and look deeper down the conversion funnel to: conversion into paying users, ARPPU, retention, and engagement, which ultimately define the channel’s ROI.

And top advertisers understand this: AdColony’s recent research, conducted among the top 100 grossing app developers, found that 96% of respondents consider user quality the #1 KPI defining channel success.

Facebook and Google Adwords, the most popular alternatives to ad networks, have their own issues.

According to Social.com Advertising Benchmark Report 2015, games are still among the worst performing across other industries, demonstrating the lowest engagement rates and the highest CPCs.

While Google’s Q4 2015 report claims 13% decrease in CPCs, it doesn’t tell much about the state of paid search.

Based on third party research data from various sources, CPCs was up 13%-18% in 2015, driven by price inflation on brand keywords, and changes to minimum bid prices set in auction.

A combination of increasing advertising costs, limited access to quality users, and lack of transparency in the marketplace has turned game user acquisition into an extremely challenging endeavor.

What is the solution?

Focus on finding well-targeted high-quality users, which will ensure high LTVs.

That’s where YouTube Brand Deals can be really helpful. Let’s explore where YouTube Sponsorship videos stand against other channels in terms of the three key considerations discussed above.

‍

Cost

As I previously covered in my article on the top mistakes marketers make when it comes to YouTube Sponsorships, there is still room for negotiation due to lack of transparent and consistent pricing model in the marketplace.

With the right strategy, advertisers can get downloads at below average marketplace rates.

Reach

YouTube is the largest platform for gaming video content, with 364 billion all-time views of gaming content. Almost three-quarters of global gaming content viewers watch game-related videos on YouTube.

The audience for gaming video content has grown 28% in 2015E,reaching 486M viewers and is set to grow to almost 800M viewers in the next two years.

Users Quality

Players driven by YouTube Sponsorships demonstrate a proven track record of higher ARPU, conversion, retention and engagement rates:

• Mereu, a game industry veteran and MassChallenge alumnus, attests that install rates from YouTube Influencers videos achieve up to 30% install rates and deliver nearly 10 times the conversion rate of an average Facebook mobile ad campaign.
• According to Deepak Gupta, Chief Revenue Officer at Machine Zone, users who download apps from YouTube are 15% more valuable than those from any other video platform.
• According to SuperData, American YouTube viewers spend on average $87 per month on games and in-app purchases, while average annual expenditure on video games software per consumer in the US is $12.41.

Power of YouTube Sponsorships

Here’s why YouTube sponsorships as a video game marketing strategy are so successful:

• Platform of Choice. YouTube is the gamer’s preferred platform. Of all the places to watch video content online, YouTube is gamers’ #1 destination for finding the content that influences purchase decisions.
• User Engagement. YouTube videos deliver a unique entertainment experience, which taps into gamers’ passion, provides useful information and creates a sense of community around the game.
• Purchase Decision Impact. According to SuperData, fifty-eight percent (58%) of American viewers are more likely to purchase a game if it is recommended by an online gaming personality

Top gaming publishers have been successfully leveraging the channel. Activision generated 10 billion views and hit third in game rankings forCall of Duty by working with influencers.

Scopely partnered with largest YouTuber PewDiePie and some other smaller channels to drive product awareness and downloads to the launch of The Walking Dead: Road to Survival through a series of Let’s Play and BTS videos.

The campaign generated 4 million views, played key role in pushing the game to #1 game in app store and has been featured in Wall Street Journal.

Works for everyone

The good news about YouTube Brand Deals is that they are affordable, not only for top industry publishers, but also for smaller independent studios.

For example, designer Davey Wreden credited thesale of 100,000 copies of his game The Stanley Parable to his encouragement of players to post playthroughs on YouTube.

I’ve also previously covered My.com’s success with YouTube Sponsorships and strategies applied to its two major titles YouTube marketing.

The most important thing is to take advantage of this growing trend before it too becomes increasingly expensive and competitive, like the marketing channels that preceded it.

By implementing a YouTube Influencer Marketing strategy today, advertisers can acquire the right gamers to boost their game to success.