Mobile advertising is a minefield. You have multiple networks, multiple methods of advertising (CPA, CPI, CPC) and an enormous mountain of cost. We get asked a LOT about mobile advertising here at appromoter so we thought that we would give you our thoughts on what does and does not work for mobile advertising as well as an outline as to what you should be considering.
Define what a customer actually is ?
Might sound obvious but on mobile, you need to really understand who your customer is. Ultimately someone who spends money to buy your app or spends money on in app purchases is a ‘customer’, versus someone who downloads your app and never uses it. You also need to understand where being a customer starts and ends. Many networks will offer you two ways of paying them for acquiring a customer. One way is CPD or ‘Cost Per Download’. This means that once your app has been downloaded you then pay up. We prefer CPI or ‘Cost Per Install’ because at least the app has been successfully installed. In an ideal world there would be an even better measurement such as ’cost per engagement’ or ‘cost per transaction’ so you pay when someone has actually interacted with your app or bought something in it. Ultimately, you need to be clear on your business objectives and what you want to achieve. What you really want is an engaged customer, one who keeps using your app and spending money (this is assuming that you have in app purchases).
Understand your users
There is little value in paying a sum to acquire a customer and then not getting your revenue back on them. If you want to know how many of your customers are engaged or why they are downloading our app and then not doing much more or are dropping out then you’ll need to put analytics in your app. By far the best solution is Flurry’s free analytics. However, you’ll need to really need to invest time in getting the most out of Flurry and understanding what it can do for you. It’s an incredibly powerful tool but you need to get the best out of it.
Most of the time, there is a fixed cost that you will need to be allocated for acquiring a customer. This is called the CPA (Cost per Acquisition) and is essentially saying how much you can afford to spend to make someone a ‘customer’. Often, this is based on actual or projected lifetime revenue of the customer or ARPU (Average revenue per user). It is really just a margin call like any business would make. If you have an app that you know can generate $15 per customer per year, then spending $3 to acquire a customer is going to work out for you. The main point here is that ARPU really comes from freemium apps with in-app purchases and tends not to work with premium apps. Premium apps have two disadvantages. Firstly, it is extremely hard to convert a customer in an ad with a premium app. Sure, you can get them in on a free trial for an enterprise app or a game demo, but then you need to upsell them to spending $5 which is hard. Once you spend money to acquire a customer and then have to net out your revenues based upon rev share to Apple or Google and other costs then you likely have little or no profit and could even make a loss. Freemium apps are much easier to get people to download and you can work out the ARPU based on an average of very heavy spending customers right down to those that spend very little. The bottom line is that one-off payment/premium apps don’t really work for mobile advertising.
Work with Experts
Because Mobile advertising is a minefield then you should be working with someone who will offer you impartial advice. If you work with a dedicated planning and buying agency like M&C Saatchi Mobile then they will give you impartial advice on which networks will work best for your particular app and what you should be doing. Many agencies will also have global offices which is really important so that they can understand the nuances of local flavour. Running a campaign in Brazil from the US without someone local would potentially be a waste of money and this is is the value that a global agency can bring you. Typically, a media planning and buying agency would not be charging you a fee on top of what you spend in advertising. Instead, agencies tend to work by getting the costs per install or per click at a percentage beneath what you would pay direct and so they simply charge you what you would normally pay and their margin is factored in – a bit like a wholesaler. We would typically advise against engaging direct with a single network or supplier as a media planner or buyer will have the best view.
The dark side of ‘incentivised downloads’
There are well known companies out there who will offer rewards such as virtual currency to users in other apps in return for them installing your app. Whilst this sounds good in theory, in practice there are some very big downsides to this. Firstly, Apple is cracking down on incentivised installs. It is a practice that is widely disliked by many in the industry and will be almost certainly be abolished. Secondly, you need to acquire the right kind of customer. Some networks use a blind ‘offer wall’ in apps and they have no clue who they are pushing your app to. This may mean that your dress up dolly app is being pushed to loads of hardcore male gamers playing an RPG. So, they see an offer to get some in-game currency, download your app and then claim the reward and never use it. Targeting the wrong customer will also mean that they feel let down or disappointed so you may inadvertently attract lots of bad reviews because of a demographic misfit. Lastly, we see tell-tale signs of low quality apps rocketing up the charts and getting terrible reviews. So, a developer with a not so good app will artificially inflate its position to get up the charts, only to then cultivate a lot of one and two star reviews which will kill the app and send it plummeting back down the charts. Whilst incentivised downloads are being killed off, offer-walls that simply show relevant apps can work well. Someone like Flurry, uses the massive data in the huge amount of apps they track to only serve you relevant apps based on what you have installed and engaged with – thereby ensuring that you are a good fit for the app they are promoting. In general, we say that incentivised downloads are problematic and many well meaning developers will ultimately get stung.
Prepare to spend BIG
The era of cheap mobile advertising is over and developers need to realise it. Distimo ran a report a year ago (December 2011) on how many downloads you need to break into the top slots in the US app store. In it they said “As expected the most volume was required to reach a top 50 position in the US free charts, your game will need to be downloaded on average 120,000 times daily. A top 25 position will require 200,000 daily downloads, whilst those elusive top 10 spots average out at 400,000 daily downloads.” Just stop and think about that. In the US alone, if you were paying to acquire a customer for $1 then your spend would need to be several hundred thousand dollars a day. Many companies are routinely spending millions each month on mobile advertising. Even more so, the distimo data is a year old so the volumes would only have increased. Pocketgamer.biz recently reported that companies such as Supercell are estimated to be making $500,000 a day through in app purchases so for someone like them it is a highly sustainable proposition. If you’re going to try a mobile acquisition campaign then we recommend setting aside at least $10,000 to try out different suppliers as well as different creatives. You will need to run different banners and different messages in lots of different places. It might be better to focus on one territory at a time rather than spread yourself thin and not be able to push up the charts or have any meaningful impact.
If you’re reading this and you’re a developer then it all might come as a bit of a shock. To be able to effectively monetise your app you really need to ensure that you have a good marketing/commercial brain as well as deep pockets. Not only will you have to work out your ARPU’s and your CPA’s but you’ll have to be able to manage agency and network relationships as well as have a good understanding of how to make good creative advertising that will hook people. Not only that, but you’ll need to spend time investing in analytics both in your app and also in understanding what is and is not working in your campaigns. This is why we recommend using a dedicated planning and buying agency.