Non-traditional Uses of Analytics with Social Games

I have lamented several times on this blog that social game company do not use analytics enough outside of monitoring and improving the actual games and monetization. I thought it might be useful if I posted some suggestions on other areas where game companies could apply analytics.

Marketing (non-performance). Social game companies are famous for how well they use analytics to optimize their performance marketing campaigns, i.e. Facebook ads. Despite ad budgets that rival those of FMCG (fast moving consumer goods) companies, however, social game companies have a very unsophisticated approach to traditional marketing (if they are even pursuing these opportunities); a billboard does not a marketing campaign make.

There are many analytic tools available, starting with SAS, which allow companies to optimize their marketing investment. They help direct resources to the appropriate marketing channels and adjust the deployment based on results. These tools also allow for near perfect execution of campaigns by using predictive analysis to put the right offer or messaging to the precise customer at the correct time. They help companies adapt instantly to customer interactions, making adjustments in real time between different marketing platforms. These tools work across television, print, web (banner), outdoors, PR and all marketing tools, allowing social game companies to create marketing campaigns as or more efficient than performance marketing alone. As it is getting more difficult (and costly) to acquire Facebook users with Facebook ads alone, creating an analytics driven marketing program is necessary for social game companies to grow.

Growth opportunities. Analytics are also a fantastic tool for evaluating growth opportunities. With all the data that social game companies already acquire, they can then mine this data to find opportunities others have missed. There are multiple tools that allow game companies to use this data for forecasting profitability of new initiatives. New products, new markets, new platforms, etc can all be evaluated analytically and ROI estimated rather than having strategic direction come from the last person standing after an eight hour Board meeting.

Intra-company. Finally, analytics are a great way to align everyone in a game company with a common interest. By making player data available to everyone, the data can drive all business decisions. If your company tracks, measures and shares results across all channels and business units the data provides the tool to optimize decision making. In addition, providing this data allows for a consistent customer experience (for example, between a Facebook game and a social mobile app) and multichannel marketing with a single view of the customer across all marketing and business functions.

I have not tried to create an exhaustive list of how you can be using analytics to drive growth, but I wanted to touch on some key areas and get people thinking that analytics is not just for improving monetization 5 percent in a month. At its best, it provides a competitive advantage when applied across the organization.

No Winner Yet in the Social Gaming Space

I have been asked on two separate occasions recently whether the social gaming wars were over; if it was impossible for a new entrant to compete. I answered intuitively that it was far from over, there were still many opportunities ranging from social mobile to targeting underserved niches. Unfortunately, I did not have any data to back up my proposition, and as I rely on analytics to drive decisions, that absence troubled me. I also understand that my intuition is not always going to be right, so finding data on this topic became crucial.

In the most recent issue of the MIT Sloan Management Review (Summer 2011), I found the evidence. They reported that 3.8 years is the average length of time before a switch in market share leadership in high-tech markets (that they studied). Out of 19 markets studied, market leadership ranged from 2 to 5.5 years and in 10 of the 19 markets there were multiple switches in market share. In the article, titled ”How Quality Drives the Rise and Fall of High-Tech Products,” the data clearly shows that product quality drives these changes in market leadership. Out of 34 total changes in leadership, 18 percent were driven by changes in quality leadership that year and 50 percent were related to a switch in quality leadership in prior years (another 20 percent was companies who always had superior products gaining leadership). Thus, 88 percent of all changes in market share leadership in high-tech companies was driven by a superior offering from the “underdog.”

The authors of the study also pointed out two key reasons that once-invulnerable companies lose their leadership position. The first is that in high-tech industries new products and technologies constantly flood the market, upsetting the status quo. Secondly, consumers of high-tech products often rely on experts or informed consumers who have reviewed the products. These two factors offset the network effects that come with market leadership.

This research confirmed my (and many others) hunch that the social game ecosystem can still change dramatically. Obviously, there will always be exceptions to the rule, but the data clearly shows it is premature and inaccurate to assume that the social gaming ecosystem cannot change dramatically.

It also points to the need to focus more on product quality than first mover advantage, as the latter does not create the long-term advantage many believed. Most importantly, there is still a lot of profit (and fun) left in the social gaming industry.