iMedia Connection June 12, 2013
iMedia Connection
by Mitchell Weisman

6 cost-effective ways to acquire more app users

Mitchell Weisman

If you have a mobile app, you're not alone. Google Play and the Apple App Store are each on track to host 1 million apps this year. In a crowded marketplace, only a tiny fraction of the top apps come from new, less established publishers. Mobile user acquisition has become more competitive, expensive, and complicated. Here are six simple tips to help your app rise above the competition -- without weighing down your business with run-away customer acquisition costs.

Try out a full range of customer acquisition channels

There are a host of available customer acquisition channels, such as social mobile advertising, mobile paid search, and in-app advertising. Try everything, within reason, a few times to see which channels work best for your specific business needs. Remember that one campaign, or even one vendor, is too small a sample to be a reliable indicator of an entire category of promotion. Trial and error can be frustrating, but it's only through sampling a range of ad approaches and vendors that you'll find the right match for your business.

This advice also extends to buying. Consider buying advertising directly and through exchanges and demand-side platforms. Testing equals knowledge. Knowledge equals power.

Tracking matters -- a lot

Before you test out different customer acquisition channels, make sure your tracking infrastructure is in place. Aim to track in a closed loop fashion. That means you want to track which channels deliver actual users. Tracking only impressions and clicks is highly insufficient, as very few translate into active customers. Clicks and impressions have little correlation to customer conversion. Take the guesswork out of your marketing investment by tracking, to completion, which specific channels and campaigns deliver actual customers.

Don't stop at installs

As you track customer conversions per channel, keep tracking post-install activities. You want to know which groups of customers not only install but actually engage with your app. The customers who actively use the app, such as completing tutorials and making it to different levels in a game, are worth more to you than the customers who install but never engage. Why? First, the customers who engage also consume impressions. This provides advertising monetization opportunities if you choose to publish ads on your app. Second, customers who regularly engage maintain your monthly average user statistics, without the need to retarget them. Third, and most importantly, the customers who engage are significantly more likely to purchase virtual goods or upgrade to paid versions of your app.

Acquire customers by ROI, not revenue value

Don't get caught up in trying to find only the high value users. Both high value and low value users can be profitable, as long as you pay for them appropriately. For example, if you can acquire a group of $5 lifetime revenue customers for $3, or you can acquire a group of $2 lifetime revenue customers for $1, then both customer groups are profitable. Acquire more of both and make sure you pay the right price for each.

Determine customer values as granularly as possible

In the world of customer acquisition, averages lie. For example, in the scenario above, let's say you make the mistake of combining both groups of customers so that they average a value of $3.50. You may then decide that you want to pay $2 for those customers. What happens next?

Your advertising partner would deliver you large volumes of customers worth $2 at a cost of $2 per customer. Those are the same customers you could have acquired for $1. Worse yet, you will acquire few, if any customers, worth $5 due to underbidding. By averaging customer values, you overpay for some lower value customers and fail to acquire the higher value ones, which reduces your profit margins. It's important to set the right price points for each group.

Pay for true performance

Out-of-control customer acquisition costs have become common for app developers. Reduce the risk from your customer acquisition campaigns by paying for customers on a performance basis. However, be careful of how you define performance. As previously outlined, impressions and even clicks are not predictors of performance. In fact, 30 percent of display ads are never even seen. Even installs are not great gauges of engagement or revenue. Consider paying for customers based on risk-free, post-install engagement measures. This is also known as cost per engagement -- (CPE) or paying only for engaged customers. Doing this empowers your advertising partner to optimize the campaigns based on your ROI objectives, which keeps your costs -- and financial risk -- in check.

Among the expansive universe of apps, a select few will become shining stars. Most will fade away. Acquire large volumes of customers -- profitably -- and make your app a dazzling success.

Mitchell Weisman is founder and CEO of LifeStreet Media, the leader in in-app display advertising for Facebook and mobile developers. Using a new kind of optimization technology called universal object serving, LifeStreet’s RevJet platform engages in high velocity testing of visual and logical objects to increase the value of ad impressions for advertisers and publishers. LifeStreet has driven over 275 million app installs for advertisers and has paid out more than $125 million in ad revenues to publishers.