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Analyzing cohort reports: The what, why, when, and how
What are cohort reports?

In today’s market, analytics is a prerequisite to turning a game into a profitable business. Analytics allow you to track how various changes you make, such as introducing a new ad unit, impact KPIs and overall game health; it’s a way to reduce uncertainty, make smart decisions, and optimize performance. 

To gain a holistic understanding of your game’s health and accurately measure and track two of the most important metrics, retention rates and LTV, cohort reports are key. A cohort is a group of users who performed an action on a specific day - for example the day on which a group of users installed your game. Cohort reports provide insight into the behavior of user cohorts, by analyzing retention and LTV metrics. 

Why cohort reports are key

Cohort reports are a crucial tool for unearthing the real picture of your game’s performance. Because they are based on the install date of user groups, cohort reports can show the impact on user LTV and retention from changes in your UA or monetization strategy. 

Nothing is ever as good as it seems...

Cohort reports allow you to go a layer deeper than the surface-level metrics offered by user activity and performance reports. For example, perhaps these two reports show a rise in ARPDAU and DAU in a specific time frame; on the surface, it would seem like your app is hitting your monetization and UA goals. However, if you use a cohort analysis of the same time frame, you might see a reduction in user retention and LTV, despite the positive uplift in ARPDAU and DAU. 

What could possibly explain this? Maybe you’ve added a new interstitial ad placement and invested a bigger budget into UA to acquire users more aggressively, but the quality of these users is poor, and the new ad placement is disruptive to the user experience. As a result, despite the rise in ARPDAU and DAU these changes triggered, retention rates are decreasing as well as user LTV - which does not reflect a healthy growth strategy. 

...Or as bad as it seems

Conversely, you might see a drop in ARPDAU and DAU in your user activity and performance reports, and as a result try to make a change to your strategy, for instance increasing the frequency of interstitial ad placements. However, it’s feasible that retention and LTV are steadily increasing for user cohorts during the same period, and therefore making a change is unnecessary and potentially detrimental.  

Ultimately, the ability to analyze cohort reports on a regular basis is key to optimizing how you monetize your content and increases the likelihood of creating a profitable game over the long-run. Let’s look into how to actually analyze cohort reports - and when you should do it. 

How to analyze cohort reports 

Understanding what you’re looking at

Cohort reports tracks the retention rate and revenue generated by different groups of users. Each row on the far left column represents a different user group, and the row at the very top shows the number of days since each user group installed your game.

For every cohort, day 0 has a 100% retention rate, and as the days progress this number drops. The shade visually signals the strength of the retention rate or revenue value, allowing you to easily see any anomalies. For example, the April 29 cohort has a much higher Day 3 retention rate than the other cohorts and can be easily identified due to its darker blue shade. This could be due to a change in monetization strategy, for instance adding a new rewarded video ad placement in the game that helps users progress during a difficult level. 

This example shows a 14 day period, but you can choose different timeframes. Looking at cohorts from a few months ago can be useful as a point of comparison with more recent cohorts, and can shed insight on the effectiveness of your current monetization strategy and game design. Aside from customizing the time period, depending on the mediation or analytics platform you’re using, you can also select specific geos and, if you have multiple games, specific titles from within your portfolio.

The same goes for revenue. As you can see below, this game’s users drive more value the longer they’re playing the game.

When to analyze cohort reports

On a daily basis

You should aim to look at your cohort report every day. First check your high level metrics in your performance and user activity reports, and then go to the cohort report to see the impact of your monetization and UA strategy on retention and LTV. By checking daily, you can stay agile with your strategy and make speedy, informed decisions to maximize the value of your users.

After changing your growth strategy

In addition to checking in every day, it’s important to analyze your cohort report soon after making a change to your growth strategy. On the monetization side, for example, perhaps you remove an ad network from your waterfall, or roll out a new ad unit in your game. 

User activity and performance reports will show relevant metrics like eCPM, fill rate, ad engagement rates and revenue, but the only way to understand the impact on retention and LTV is through your cohort report. 

This is also true for your UA strategy - if you increase your bid and scale your installs as a result, it’s vital to check the impact of this on retention and LTV. Even though boosting your UA budget might drive an increase in DAU, if it’s bringing poor quality users, in turn lowering retention rates and LTV, then it's paramount you identify this issue early on. Otherwise, you risk wasting your budget.

After changing your app

Changes to your app, such as a new version update, should also be closely monitored using cohort reports. Perhaps the update triggers a short-term drop in ARPDAU, but because you fixed certain bugs and improved the user experience, retention and LTV of users is increasing.  

Analyzing cohort reports will contextualize such changes and give you a holistic view of their impact on your game’s business performance.

The most successful game developers today are the ones who constantly optimize their game design and growth strategies. Cohort reports are a means to this end: they help you contextualize your other KPIs, measure the impact of changes you make, and ensure you’re never blinded by potentially misleading surface layer metrics. With cohort reports, you can always keep a close eye on the most important metrics for long-term success: retention and LTV. 

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