Ad driven is the new lean: Mobile Spree Berlin 2019
Hyper-casual games were an especial focus at Mobile Spree, and with good reason. As noted in a recent report from App Annie, hyper-casual has spurred gaming as a whole to reach new heights, as 11.2 billion games were downloaded in 2018 alone.
Johannes Heinze, Co-Founder of Berlin-based mobile games developer Popcore, knows a thing or two about the scene. In his talk at Mobile Spree, he shared his recipe for success in the space, giving a behind-the-scenes view into the life of a hyper-casual developer, and what it takes to develop such games at scale. We’ve got the full transcript, video of the session, as well as three highlights for you to catch up below.
Living on data: Hyper-casual is all about building an MVP as quickly as possible, then “testing and iterating very quickly to constantly learn.” Any additional feature that makes the game more popular can be added and scaled with round-the-clock testing making sure new additions hit the mark. “There are learnings that give us a step-by-step understanding of what we're doing better, how we're approaching our development, and which set us apart from the competition.”
The lean methodology: Popcore, just like Johannes previous company, is bootstrapped. That requires a lean way of thinking, keeping waste to a minimum. This approach reaps the benefits: “If you manage to boil it down in a way that it's accessible to a user and even accessible through an ad, then it's a very powerful tool.” Keeping the games focused makes them accessible. In turn, they net more downloads and more ad views.
A new way of thinking: Hyper-casual development may be the newest and most exciting form of development, but it might not work for everyone else: “Is our model applicable to any kind of vertical? Probably not.” This is because gaming has inherent advantages: “Games can be played by everyone. And in the market where we can address everyone, we can also basically get our content that can be engaged by every single user in front of them quite quickly.” Other verticals may struggle to test aggressively with smaller audiences, but that doesn’t rule out the lean model entirely: “Is there still potential for many other verticals to adopt a similar mentality? I think so.”
The full transcript
Today, I'd like to talk to some extent about hyper-casual games, but more about our approach of developing these games in the first place. We already had, well you've heard about like in the panel before how different companies actually approach this topic. I'd like to be very basically quite literally show you how we develop these games and how I believe that the concept that we've created and the processes that we established within our company can also be interesting for like a broader audience also outside of gaming.
But just as a quick introduction to myself. I started working in mobile advertising pretty much exactly 10 years ago. Back then it's Modo, then I was responsible for the pivot to mobile at Fyber and then I started my own company together with my brother. And we ended up being acquired by AppLovin back then in 2014. Then for the next three and a half years, I was responsible for international business at AppLovin. And the beautiful thing about AppLovin especially the time that passed there was that a lot of things have changed. The ecosystem has evolved quite dramatically especially within gaming.
That ended up being one of the major drivers for my brother and myself to start another company called Popcore exactly a year ago. So what does Popcore do? We develop hyper-casual games. You can throw around definition, it be snackable. That's actually not that important. The important aspect is it's fun content that's built around ads. It's pretty simple. It's native to the ecosystem that has evolved throughout the last couple of years. And we utilize that in a relatively systematic manner.
So even though the company is still relatively young, we managed to launch seven games, which are all live at the moment. We currently employ 18 people and we are venture backed which is actually relatively uncommon in the space. And another important aspect here is we do everything in-house. Meaning the dominantl model within hyper-casual ... and there are obvious like exceptions to rules. But the dominant model here is that there's a publisher and a developer. We do everything in-house, from development, to the ads, to the automation of processes, to the scaling, literally everything.
But when we kicked off the ... when we started our own company again, it was basically a question, "How do we approach the development part?" So after all these years working in mobile advertising with the focus on game advertisement, my brother and I had a pretty good idea about the business of gaming. Like, "How do dynamics work, who are the dominant players?" But the challenge there was how do we approach a development aspect to it. And the answer for us was relatively straightforward as in we just used the tools that we use previously.
So basically the previous company that we started was bootstrapped. So we iterated fast and basically built a prototype around user feedback. And that's exactly kind of like the process we considered to be important for Popcore as well.
So what is important here in terms of this talk. So, the one side, if you said the lean methodology is basically just like a mechanism or like a methodology that was coined like back in 2011, maybe influenced by the financial crisis. That means like in the years from 2009, 2011, most companies ... there are a couple of exceptions, had like hard times with raising money. So therefore it was really important to develop products with as least waste as possible.
And doing that ... like the most efficient way which is laid out there is utilizing market feedback very early in the process. And that's to some extent what the core of the lean methodology is or just like a concept called minimum viable product which is basically just the condensed idea of like a product built into something that is good enough in order to get feedback. That's it. Not more, not less. And the other important aspect is- if you start somewhere with the MVP, then you need to iterate it and consistently improve it. And that's described in the Build-Measure-Learn Cycle.
But the other interesting element here is, so now we're at least like for a theoretically approach on how to build and tackle the development. But since we started our last company, the ad world has changed quite dramatically. So we started our first company at the end of 2012 and since then mobile ads are pretty much everywhere. So basically I like to refer there to a quote that Mark Andreesen released in 2011 with a remarkable post about how the hardware like will be accessible to every human being in the form of mobile devices, and that software in itself is step by step like eating the space that's being created by hardware.
And I'd argue that this all has happened. It's fascinating and if you read it, it's fascinating how many things this guy saw there and have materialized and changed our lives. But this vacuum that was created by hardware and software is step by step eaten up by ads. So in terms of free content, you see ads everywhere on mobile.
And the formats that being shown on mobile devices are very immersive. As in, we talk about full screen ads like video, as well playables that really have the possibility to showcase a product and ultimately get a complex message across. And that in a completely programmatic data driven ecosystem that can always address the right users all over the world.
This obviously also has down sides, right? So basically we've talked about how the platforms provide less and less data, and how there is more and more data within the platforms in order to basically tell us what content we have to consume or can consume, and which content is not suited to us based on our previous behavior in terms of clicking on ads and clicking on content.
And the other interesting aspect here- so throughout these different dimensions and the emergence of two major players in the space. The content platform as well as like the ad experience itself feels more and more native, and just like a big blur.
And even though I do not consider the following steps to be absolutely incredible, I think that you get the point. So if you go to your Instagram feed, in terms of influencers and the content they present, in many, many cases it's more and more difficult to kind of differentiate the person, the product and what they're selling. Are they just selling themselves- are they selling the product or they're selling a lifestyle?
Ultimately, whenever Kylie Jenner basically uploads the photo with big lipstick, sure, she sells her product. And to a similar extent, if you look at platforms like Snapchat, the content units become shorter and shorter. The ads basically have like limitations that have the same length as the content itself. So it gets difficult to read o differentiate what is the content and what is the actual content or the ads, the main differentiator is just like a call to action or not.
A similar thing has also happened to mobile gaming. So, if you just go to the app store and see all these hyper-casual games, then as soon as you open them up, you will likely see another ad of another hyper-casual game quite quickly. Because that's how these games work. If you have an ad, you have a surface for other ads and the other ads are also for games. So, it's completely native and it's basically a very integrated process that works well for most of the folks who actually understand how to utilize the ecosystem in their favor.
Hence, this is actually the way how I look at this kind of phenomenon. The beautiful thing about this ecosystem is that with the rich ad units that you have available nowadays, you can literally get the content or the core essence of your product in front of many, many, many more users. Because depending on how good your ad is, the 5 seconds or even 10 seconds, they can get the exposure of a user, can really help you to get even relatively complex phenomenon across.
If you understand the chance the right way and if you're also basically utilize them in a programmatic fashion. And this is one thing that we utilize quite dramatically. So that means if we now approach our system of developing a minimum viable product for such a hyper-casual game, so the ad in itself becomes the part of the experience that we're creating.
And this helps us to basically showcase and figure out very very quickly if what we're producing actually has merit, and if users were interested into it or not. And I understand that many companies say that this is a fast-paced environment, and how is it possible that they actually produce ultimately like games faster than we produce ads?
But ultimately it is a cycle that can work completely integrated if you start thinking about the experience from the ad funnel and then basically step-by-step guide to user into the experience. This in itself only works if you basically define the minimum viable product in a way that it's just a condensed version of your idea, and in fact this is really critical, right?
So as in the only thing that you can get across here is a simple message or a simple idea. But if you manage to boil it down in a way that it's accessible to a user and even accessible through an ad, then it's a very powerful tool. And this means like in the context of the ad, that most of the hyper-casual game ads are basically just very straightforward gameplay, layered on with indicators that basically tell you how you interact with the ads. And what I basically use with the acronym on screen is that you get what you see. So what you see is what you get, that's kind of like the mentality of these ads in the first place.
So, whenever we define, or the process how we define and test these products is in itself from my perspective quite interesting. And we tried a couple of different durations to figure out what is the right length. How to structure the different elements in the most efficient way. But most importantly, we developed the first kind of prototype including all these different elements from the content to the ad in seven days.
So, basically that means for us that we start and kick off the process in coming up with an idea and just produce a playable and accessible prototype within four days. This prototype, or MVP, is exactly only what I've mentioned before. It's basically a condensed idea that is showcased in an ad with enough content that we can actually understand if the user is engaging with the content or not — not more, not less.
And how we figure out if the users are engaging is done after the four days, you just upload the app. Start campaigns and see how the click conversion and engagement rates are. And based on these metrics, we have a pretty good idea if that's actually like a content or an idea that we want to invest more time in. And this happens over and over again, and with every single developer that we hire, we get better and better at the process.
Because at the core of this, there's learnings. There are learnings that we step-by-step understand better what we're doing, how we're approaching it, and setting us apart from the competition here. And that's kind of like a case study what we did, and what we could achieve with that process, is what we shortly addressed at the beginning. So, we had the idea of Folding Blocks at the beginning of April and we managed to scale that game to 1 in 10 million downloads within a month.
So that means we developed the MVP in-house, we developed ads in-house. We started to test things, we started to scale things, we started to operate the monetization, and onboard even new channels while we're doing this. And the fascinating thing with that process in itself is that it's an inherently interesting or like enabling for the people that work with us. Because the amount of waste that we produce with a single prototype is minimal.
So if we have an idea ... and obviously there are many ideas and many concepts around, then we can just test it. We can test it, and with every test, we get better and faster, and understand how to basically get a given idea or vision across.
So to wrap the whole thing up, ultimately- So, what I described here is a process that enables us to test and iterate things very quickly and constantly learn and put the learnings and the data-driven mentality as the core of the company. Is it applicable to any kind of vertical? Probably not. But is there potential for many other verticals to adapt a similar mentality? I think so.
And we step-by-step see that also like similar processes are being applied outside of the gaming world. The cool thing about gaming is that actually it works incredibly well within that vertical because inherent advantages that that game can be played by everyone. And in the market where we can address everyone, we can also basically get our content that can be engaged by every single user in front of them quite quickly.
The downside is also pretty obvious and I think also something that has been discussed here. The competition is harsh, and any single products can be copied in the same pace and if their competition is actually as fast as we are in more less in the same time than we've developed a product.
But the interesting thing becomes the learnings and with every single test, we get better and better in what we're doing and better and better in execution, automating different processes around it.