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

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 an 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. When a user clicks on a Tiny Partners promotional spot and subsequently installs a TinyCo game, the developer earns at least 50% of the lifetime net revenue that user generates for TinyCo.

“User acquisition costs continue to rise and just as in the past with web advertising, most ad banner formats on mobile devices are being tuned out by users. Web advertising evolved over time with better targeting, rich media and branded content, and we want mobile to evolve faster. TinyCo can provide our partners with the ability to create better performing promotions for our games and then share in the success, “ said Andrew N. Green, Director of Business Development of TinyCo

“With TinyCo, we were treated like a partner, not just a vendor. TinyCo was willing to share their revenue with us. Other companies were just interested in the cost per download.” said Dave Yonamine, CEO, Mobility Ware an early partner in the program.

App Developers can create promotions that compliment their app’s user experience rather than detracting from it or cannibalizing their current banner ad inventory. In the sample integration below, the developer has included free TinyCo-branded items in the game’s virtual goods store, as well as a link to download the game Tiny Monsters.

TinyCo has a proven track record of monetization on iOS, Android and Amazon; their games are consistently among the top grossing titles on all 3 platforms. Tiny Partners’ is an excellent opportunity for mobile developers to tap into TinyCo’s substantial revenue stream without cannibalizing their existing advertising revenue.

TinyCo is encouraging developers to pursue deeper brand integrations, and will look to increase developers’ revenue share percentage based on the depth of their brand integration. The integration is easy and flexible and available on multiple platforms (works on iOS, Android OS, Google play, Amazon). Becoming a partner is free and easy.

For more information on the Tiny Partners initiative, please go here: www.tinyco.com/tinypartners