Dictatorship Or Democracy?

[Kohola_KinG]

Originally Posted by Stephen

Yea, you're totally right.

I was only awake when i typed this give me a break lol

[Stephen]

Originally Posted by Kohola_KinG

I was only awake when i typed this give me a break lol

Well, since you were just waking up -- I have the information from the 80+ accounts we manage on a daily basis. There are some which spend as little as $1,000 a month. There are some which spent in excess of $50,000 in May.

The real indicator is going to be how much an advertising client can generate in profit from each lead they gain through advertising; this is called ROI (Return of Investment).

Let's suppose that Graal identifies the "lifetime" of a user as 3 months and over these three months the average user generates $6 of revenue. That would mean that for any given month Graal could not afford to spend more than $2 in order to gain one user -- and that's with the assumption that every user gained through advertising is going to spend $6 in 3 months!

Okay, so let's do the math - someone mentioned CPC (cost per click). We'll convert that into CPI (Cost Per Installation) in order to illustrate my previous message more clearly.

Graal buys 100,000 impressions through an advertiser at $0.50 CPM (cost per mille) which results in $50 of spend. Let's say the CTR (Click Through Rate) for Graal's advertisements are 2.50% (this is a healthy average).

That means that of the 100,000 impressions, only 2,500 people have clicked. Let's talk about conversions rate (CVR). Of these 2,500 clicks not all of them will generate conversions - in fact it's fairly normal to see 1.00% - 1.50%. We'll take the higher number.

with 100,000 impressions and 2,500 clicks, we can expect 38 conversions (rounding up from 37.5). Okay, so Graal now has 38 new players.

What happens now? Not all of these players will meet the 3 month "lifetime" (this 'lifetime' parameter would be defined by statics Stefan and Unixmad have access too, we can only speculate). Let's say 50% of the 38 stick around; I think this is an extraordinary retention rate but we'll continue the example.

Now, of the 38 original conversions we have 19 players which stay for the entirety of the 3 month lifetime. Let's talk about purchases - this is where the ROI comes into effect. Let's say 50% of the retained conversions make purchases. In the mobile industry we typically see something like 1.50% or in that area, but we'll pretend that Graal has a phenomenal flow from conversion to purchase.

19 players make purchases of $2... Graal has generated $48 in revenue while spending $50 to gain the revenue -- they're at a loss of $2. The initial $50 represents about 1 hour of traffic.

Now it should be clear why it's not a problem you throw money at. There is a lot of money to make in the advertising industry, because of this some of the sharpest minds and best technology are put into play. If you think this system can be beat with free advertising systems then I'm left wondering why the Mobile Advertising Industry is set to surpass all other advertising mediums in existence instead of the free options.



All of that being said - advertising could work, but Graal would have to optimize their purchase flow or the ROI won't back out. Would love to give Graal a try at my work but that's a decisions Stefan and Stephane need to make!