How often do you see ads inside your favorite mobile app? Today, there’s a good chance the answer depends on how you interact with the app.

Mobile game developers are experts in audience segmentation, building multiple experience paths for their users based on their characteristics. Mobile audience segmentation can lead to revenue uplift of 20 percent or more in average customer lifetime value, according to the panelists at a recent monetization talk at Gamesforum Barcelona.

Defining audience segmentation

Audience segmentation is the process of organizing a group of people into groups that share common characteristics.

Brands use audience segmentation to send ads to the people most likely to purchase their goods and services. Advertising platforms like Start.io offer advertisers thousands of audience segments, from the very large (“everyone in the United States,” “women globally between the ages of 18-34”) to the very small (“commercial goat farmers in Idaho,” “bicyclists in Hawaii”).

Mobile app developers look at audience segmentation through a different lens: Their audience is everyone who uses their app, and audience segmentation is the process through which they group their audience into two or more buckets, based on common characteristics.

For mobile app developers, the goal of audience segmentation is to increase customer lifetime value by doing two things:

  • Extending the time people use the app before abandoning it
  • Showing people the monetization levers they’re most likely to interact with

For large developers, small improvements to monetization can mean millions of dollars in additional revenue over time.

“We are very happy with a small uplift,” one game developer said at Gamesforum Barcelona. “Sometimes we have 5 percent uplift, sometimes we have 3 percent uplift. Sometimes we just get insights. It’s quite doable to get 15- to 20 percent overall [revenue per user] uplift—it’s quite doable, just start doing it.”

Audience segmentation through spending behavior

For more than a decade, mobile game developers have used a fishing analogy to segment their users by spending behavior—big spenders are “whales,” medium spenders are “dolphins,” and small spenders are “minnows.”

“Minnows” might see lots of rewarded videos, where they can earn free in-game items for watching ads. On the other side, “whales” might see very few ads, and instead encounter frequent offers to buy high-ticket items with cash.

Both groups are happier with a personalized experience: Minnows don’t mind spending their time, and whales don’t mind spending their money.

With a behavior-based segmentation path, all users get the same experience at the start of the game, with tests in early gameplay to learn whether they’re whales, dolphins, or minnows.

Audience segmentation through user acquisition channel

For some mobile app developers, audience segmentation begins with one of the earliest signals that a user generates—whether they downloaded an app organically, or through an ad campaign.

One mobile game company that earns $200 million per year from one of their main titles found that people who download the game through a paid media campaign are typically skeptical of the game at first, and need a few days of uninterrupted gameplay to get hooked, a developer at Gamesforum Barcelona said.

If the person is still playing by day 3, the company gradually turns on ads and offers for in-game items. This developer found that people who downloaded their game organically had far less skepticism, and were OK with seeing ads and in-game offers on day 1.

Audience segmentation through in-app decisions

Mobile app developers have a tough challenge—they need to design apps that are quick and easy to consume for casual users, and richly engaging for hardcore users.

Mobile game developers segment their audience into casual vs. hardcore players, by measuring how often someone opens the game, how long they play during an active session, and what types of decisions they make inside the game.

At Gamesforum Barcelona, one game developer described creating up to six audience segments based on user behavior inside the game.

On one end of the spectrum, ultra-casual players typically open the game sporadically, play for a few minutes and don’t open the game again for multiple days. This group typically doesn’t like engaging with rewarded video ads, and will close the app early if they encounter an ad they can’t skip.

On the other end of the spectrum, ultra-hardcore players open the game several times a day, and play longer game sessions. This group is most open to rewarded video ads, and more likely to buy in-game items.

Audience segmentation through demographic characteristics

Game developers collect (or infer) demographic information about their players, and use this information to segment their audience and personalize the in-game experience.

This could include characteristics like age, gender, geographic location, and interests.

How to set up audience segmentation tests

At Gamesforum Barcelona, game developers said they are constantly building monetization and audience segmentation tests that run on 10- to 20 percent of the user base. If the test is successful, it’s gradually introduced to the entire user base.

Tests are designed to answer two questions:

  • Is this a better way to segment our audience?
  • Does this test yield higher average lifetime value per user?

There are a nearly infinite number of ways to segment an audience, and A/B tests reveal which segments yield meaningful differences in user behavior.

Could your mobile app benefit from audience segmentation?