/// Soaring Customer Acquisition Costs Drive TinyCo to Create Affiliate Fees for Mobile

October 15, 2012  |  All Things Digital

Mobile developers are currently dealing with a losing situation: It costs more to acquire a customer than a customer is worth. The lopsided economics of the business are driving at least one mobile game developer to do something about it. TinyCo, which is known for popular game titles like Tiny Monsters and Tiny Village, has created an affiliate program that will pay 50 percent of the revenue that a customer spends in its apps for each referral that another game developer generates. The program, called Tiny Partners , is a spin on the affiliate models that are used by online retailers like Amazon, which share revenue from any sale that originated on another site. Andrew Green, the head of business development for TinyCo, said that user acquisition costs are “going through the roof right now,” and that a lot of partners are buying at a loss due to a lack of ad inventory. “Just like Amazon.com, we are trying to bring that model to mobile.” As part of the program, application developers are encouraged to tightly integrate TinyCo’s games’ assets into their game, rather than just relying on banner ads. For example, one game-maker included the eggs from TinyCo’s Tiny Monsters in its game. When the egg cracked open, it created an advertisement that told the player to go download Tiny Monsters from the app store. From then on out, that developer received 50 percent or more of all the revenue that customer spent within Tiny Monsters. Companies will have a chance to earn even more than 50 percent, depending on the level of integration and volume of downloads. Green reasons that the company can create such generous terms because it can afford to give away half of its revenue if it’s paying zero to acquire the customer. Based on current economics, Green estimated that game developers are paying $2 to $4 for each new customer, and in some cases as much as $5 or $6. “There aren’t that many customer lifetime values that are on par with a $6 acquisition cost,” he said. “That’s mythic. In fact, it’s going to be very tight for most developers at $2.” Green is optimistic that developers will find the program enticing, especially since TinyCo’s games are known for generating a lot of in-app purchases  and consistently ranking among the top grossing titles on Google Play, Apple’s App Store and Amazon’s Appstore. Other companies, like Chartboost, have experimented with similar advertising programs, which allow developers to swap ad inventory to help generate downloads at lower costs. Here’s the press release outlining the program’s details: TinyCo gives app developers 50% or more of their revenue with the Tiny Partners’ program The Industry can drive better marketing and revenue results through promotional brand integrations TinyCo, the San Francisco based developer of popular mobile games such as Tiny Monsters and Tiny Village, today announced Tiny Partners’, a program established to encourage collaboration between TinyCo and mobile developers through revenue sharing and brand integration. Mobile app developers can integrate Tiny Partners into their apps to create branded promotional spots for TinyCo games

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Soaring Customer Acquisition Costs Drive TinyCo to Create Affiliate Fees for Mobile

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