IDEAS home Printed from https://ideas.repec.org/a/eee/ijrema/v40y2023i2p342-361.html
   My bibliography  Save this article

Satiation and cross promotion: Selling and swapping users in mobile games

Author

Listed:
  • Haenlein, Michael
  • Libai, Barak
  • Muller, Eitan

Abstract

One of the main challenges facing the mobile game industry is an alarming level of satiation, that is, a decline in user engagement and consequently in ad viewing, spending, and retention. Satiation lowers users’ CLV to an extent that renders acquisition from the likes of Facebook and Google untenable, driving game publishers to cross-promote, that is, sell and swap users among themselves. We model this cross-promotion as first, a screening mechanism, in that the fact of playing a game indicates specific preferences that might be suitable to an exchange with similar games; and second, as a resetting mechanism that enables the swapped users to reset their engagement in the new game, thus rendering the swap or sell beneficial to both buyer and seller. We show that there exists an optimal level of satiation with a game, and with this level, we show the conditions under which the game publisher cross promotes, and when it does, what the conditions are for selling rather than swapping. We extend the analysis to the case in which advertising costs and conversion rates are related; explain why they might be negatively correlated, and show that our main results still hold.

Suggested Citation

  • Haenlein, Michael & Libai, Barak & Muller, Eitan, 2023. "Satiation and cross promotion: Selling and swapping users in mobile games," International Journal of Research in Marketing, Elsevier, vol. 40(2), pages 342-361.
    • Handle: RePEc:eee:ijrema:v:40:y:2023:i:2:p:342-361
    DOI: 10.1016/j.ijresmar.2022.12.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167811622000829
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijresmar.2022.12.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Appel, Gil & Libai, Barak & Muller, Eitan & Shachar, Ron, 2020. "On the monetization of mobile apps," International Journal of Research in Marketing, Elsevier, vol. 37(1), pages 93-107.
    2. Prins, R. & Verhoef, P.C., 2007. "Marketing Communication Drivers of Adoption Timing of a New E-Service among Existing Customers," ERIM Report Series Research in Management ERS-2007-018-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    3. Yicheng Song & Nachiketa Sahoo & Elie Ofek, 2019. "When and How to Diversify—A Multicategory Utility Model for Personalized Content Recommendation," Management Science, INFORMS, vol. 65(8), pages 3737-3757, August.
    4. Hana Choi & Carl F. Mela & Santiago R. Balseiro & Adam Leary, 2020. "Online Display Advertising Markets: A Literature Review and Future Directions," Information Systems Research, INFORMS, vol. 31(2), pages 556-575, June.
    5. Leif D. Nelson & Tom Meyvis & Jeff Galak, 2009. "Enhancing the Television-Viewing Experience through Commercial Interruptions," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 36(2), pages 160-172.
    6. Eva Ascarza & Scott A. Neslin & Oded Netzer & Zachery Anderson & Peter S. Fader & Sunil Gupta & Bruce G. S. Hardie & Aurélie Lemmens & Barak Libai & David Neal & Foster Provost & Rom Schrift, 2018. "In Pursuit of Enhanced Customer Retention Management: Review, Key Issues, and Future Directions," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 5(1), pages 65-81, March.
    7. S. Sajeesh & Jagmohan S. Raju, 2010. "Positioning and Pricing in a Variety Seeking Market," Management Science, INFORMS, vol. 56(6), pages 949-961, June.
    8. Jiwoong Shin & K. Sudhir & Dae-Hee Yoon, 2012. "When to "Fire" Customers: Customer Cost-Based Pricing," Management Science, INFORMS, vol. 58(5), pages 932-947, May.
    9. Hamamura, Jumpei, 2019. "Unobservable transfer price exceeds marginal cost when the manager is evaluated using a balanced scorecard," Advances in accounting, Elsevier, vol. 44(C), pages 22-28.
    10. Chrysanthos Dellarocas & Zsolt Katona & William Rand, 2013. "Media, Aggregators, and the Link Economy: Strategic Hyperlink Formation in Content Networks," Management Science, INFORMS, vol. 59(10), pages 2360-2379, October.
    11. Zijun (June) Shi & Kaifu Zhang & Kannan Srinivasan, 2019. "Freemium as an Optimal Strategy for Market Dominant Firms," Marketing Science, INFORMS, vol. 38(1), pages 150-169, January.
    12. Upender Subramanian & Jagmohan S. Raju & Z. John Zhang, 2014. "The Strategic Value of High-Cost Customers," Management Science, INFORMS, vol. 60(2), pages 494-507, February.
    13. Xavier Drèze & André Bonfrer, 2009. "Moving from customer lifetime value to customer equity," Quantitative Marketing and Economics (QME), Springer, vol. 7(3), pages 289-320, September.
    14. Peter S. Fader & Bruce G. S. Hardie, 2010. "Customer-Base Valuation in a Contractual Setting: The Perils of Ignoring Heterogeneity," Marketing Science, INFORMS, vol. 29(1), pages 85-93, 01-02.
    15. Gene Moo Lee & Shu He & Joowon Lee & Andrew B. Whinston, 2020. "Matching Mobile Applications for Cross-Promotion," Information Systems Research, INFORMS, vol. 31(3), pages 865-891, September.
    16. Felipe Caro & Victor Martínez-de-Albéniz, 2012. "Product and Price Competition with Satiation Effects," Management Science, INFORMS, vol. 58(7), pages 1357-1373, July.
    17. Sam K. Hui, 2017. "Understanding repeat playing behavior in casual games using a Bayesian data augmentation approach," Quantitative Marketing and Economics (QME), Springer, vol. 15(1), pages 29-55, March.
    18. Jeff Galak & Justin Kruger & George Loewenstein, 2013. "Slow Down! Insensitivity to Rate of Consumption Leads to Avoidable Satiation," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 39(5), pages 993-1009.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Appel, Gil & Libai, Barak & Muller, Eitan & Shachar, Ron, 2020. "On the monetization of mobile apps," International Journal of Research in Marketing, Elsevier, vol. 37(1), pages 93-107.
    2. Chutian Wang & Bo Zhou & Yogesh V. Joshi, 2024. "Endogenous Consumption and Metered Paywalls," Marketing Science, INFORMS, vol. 43(1), pages 158-177, January.
    3. Miguel Godinho de Matos & Pedro Ferreira, 2020. "The Effect of Binge-Watching on the Subscription of Video on Demand: Results from Randomized Experiments," Information Systems Research, INFORMS, vol. 31(4), pages 1337-1360, December.
    4. Vinh Truong, 2024. "Optimizing mobile in-app advertising effectiveness using app publishers-controlled factors," Journal of Marketing Analytics, Palgrave Macmillan, vol. 12(4), pages 925-943, December.
    5. Reich, Taly & Fulmer, Alexander G. & Dhar, Ravi, 2022. "In the face of self-threat: Why ambivalence heightens people’s willingness to act," Organizational Behavior and Human Decision Processes, Elsevier, vol. 168(C).
    6. Numminen, Emil & Sällberg, Henrik & Wang, Shujun, 2022. "The impact of app revenue model choices for app revenues: A study of apps since their initial App Store launch," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 325-336.
    7. Pan Li & Alexander Tuzhilin, 2024. "When Variety Seeking Meets Unexpectedness: Incorporating Variety-Seeking Behaviors into Design of Unexpected Recommender Systems," Information Systems Research, INFORMS, vol. 35(3), pages 1257-1273, September.
    8. Le Wang & Paul Benjamin Lowry & Xin (Robert) Luo & Han Li, 2023. "Moving Consumers from Free to Fee in Platform-Based Markets: An Empirical Study of Multiplayer Online Battle Arena Games," Information Systems Research, INFORMS, vol. 34(1), pages 275-296, March.
    9. Yunke Mai & Bin Hu, 2023. "Optimizing Free-to-Play Multiplayer Games with Premium Subscription," Management Science, INFORMS, vol. 69(6), pages 3437-3456, June.
    10. Aurélie Lemmens & Sunil Gupta, 2020. "Managing Churn to Maximize Profits," Marketing Science, INFORMS, vol. 39(5), pages 956-973, September.
    11. Manqi (Maggie) Li & Yan Huang & Amitabh Sinha, 2020. "Data-Driven Promotion Planning for Paid Mobile Applications," Information Systems Research, INFORMS, vol. 31(3), pages 1007-1029, September.
    12. Sun, Xiaochi & Cui, Xuebin & Sun, Yacheng, 2023. "Understanding the sequential interdependence of mobile app adoption within and across categories," International Journal of Research in Marketing, Elsevier, vol. 40(3), pages 659-678.
    13. Ki-Eun Rhee & Raphael Thomadsen, 2017. "Behavior-Based Pricing in Vertically Differentiated Industries," Management Science, INFORMS, vol. 63(8), pages 2729-2740, August.
    14. Yuxin Chen & Xinxin Li & Monic Sun, 2017. "Competitive Mobile Geo Targeting," Marketing Science, INFORMS, vol. 36(5), pages 666-682, September.
    15. Newman, Andrew H. & Tafkov, Ivo D. & Waddoups, Nathan J. & Xiong, Xiaomei Grazia, 2024. "The effect of reward frequency on performance under cash rewards and tangible rewards," Accounting, Organizations and Society, Elsevier, vol. 112(C).
    16. Adithya Pattabhiramaiah & Eric Overby & Lizhen Xu, 2022. "Spillovers from Online Engagement: How a Newspaper Subscriber’s Activation of Digital Paywall Access Affects Her Retention and Subscription Revenue," Management Science, INFORMS, vol. 68(5), pages 3528-3548, May.
    17. Sumitro Banerjee & Alex P. Thevaranjan, 2019. "Targeting and salesforce compensation: When sales spill over to unprofitable customers," Quantitative Marketing and Economics (QME), Springer, vol. 17(1), pages 81-104, March.
    18. Liyang Xiong & Honglei Yu & Zhanqing Wang, 2021. "Competition in a Variety Seeking Market With Brand Name Awareness," SAGE Open, , vol. 11(2), pages 21582440211, April.
    19. Aparupa Das Gupta & Uday S. Karmarkar & Guillaume Roels, 2016. "The Design of Experiential Services with Acclimation and Memory Decay: Optimal Sequence and Duration," Management Science, INFORMS, vol. 62(5), pages 1278-1296, May.
    20. Cammy Crolic & Chris Janiszewski, 2016. "Hedonic Escalation: When Food Just Tastes Better and Better," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 43(3), pages 388-406.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ijrema:v:40:y:2023:i:2:p:342-361. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/international-journal-of-research-in-marketing/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.