This year’s biggest user acquisition lessons

What were my key optimisation metrics this year? How much of a part did LTV play? Which LTV model is right for my business? How do I ensure successful results from Google’s UAC campaigns?

Many lessons have been learned in user acquisition in 2018. Last week, we hosted a dinner & discussion in Berlin, with a diverse bunch of app marketing industry leaders – spanning multiple verticals – to reflect on their key learnings and to share some of our own.

Discussing these hot topics, and more, were mobile marketing thought leaders across; Lab Cave Fibonad, Ada Health, Pixum, TreasureHunt, Wargaming, Verv, a top-grossing dating app, and Appsumer.

The complexity of issues facing UA teams on a daily basis was evident from the discussion that ensued. Each growth marketer has their own unique challenges, goals and market to address. While our speakers bring their individual expertise and experience, the overlap in key learnings was apparent.

 

Our industry leaders, last week in Berlin.

 

  1. Google UAC might be a “black box”, but it works

Google Universal App Campaigns (UAC) were first launched in 2015, as a way for Google to incorporate machine learning into its ad offerings. In 2017, Google made UAC compulsory across all AdWords app campaigns (Search, Display and YouTube). The biggest challenge for most app marketers was relinquishing control and transparency on optimising their UA campaigns and placing full trust in the hands of Google algorithms to do that for them. UAC have been labelled a “black box” – into which you throw all your ads, set a target CPA and budget – and sit back.

Growth Lead at Ada Health, Raffaele Triggiano stresses that in order to be successful with Google UAC you must operate with…

“consistency, stability and accuracy…I apply the same strategy and optimisations across campaigns. I monitor conversion metrics in Google Ads, attribution platform and our internal database. If there are unusual changes, I take immediate actions, even if it’s not what has been suggested by the network such as Google. Absorbing the learnings with the rest of the team and other departments is the most relevant decision to take at this stage.”

One UA manager at a top-grossing dating app advises to “setup campaigns on as much of a granular level as possible with every possible targeting. The logic is to use as many parameters with as broad targeting as possible.”

The key to success with UAC is controlling the moving parts—the goals, the bids, budgets and the creatives you provide—for Google to test and optimise for data-driven results. Our experts agreed that Google UAC works, and for many who have fully embraced it, it has become their best performing paid UA channel.

 

  1. Ad revenue is difficult to assign

2018 saw ad revenue become an increasingly important part of a developer’s monetisation strategy. App Annie predicts that app monetisation will more than double by 2020 to $120B globally.

As it stands, the way ad revenue is calculated is very tricky. The way it reverts to a UA strategy can be even trickier. With 300 games in the app store, Lab Cave’s CMO, Enric Pedro, shares how he is tackling the subject of ad revenue calculation.

“We calculate ad revenue on a CPM basis. We work out the volume of CPM by country and then by network to then see what the effective CPM (average) is. We also need to take into account how many users we lost because we were monetising them to an extreme degree. As a developer based on ad revenue, I want to get as many impressions as possible, but if I am going to lose users who downloaded the app organically because they were bombarded with ads, then that network is not good for me. The network might be giving me the highest CPM, but maybe I am losing most of my users this way.”
  1. LTV is becoming more important across verticals

Appsumer’s client base spans gaming, travel, gambling, messaging, financial and more, and spend over $200m pa between them. What we’ve seen consistently across the board this year is that companies from different verticals are focusing more on LTV.  As one of the most important metrics for determining an app’s success, it makes sense that companies from all verticals are utilising LTV more than ever.  The biggest spenders are looking at ROAS based on predictive LTV as well as defining a short cohort window of ROAS to optimise against which correlates with this.

It’s important to choose the right framework that makes sense for your business. Appsumer’s Head of Customer Success, Inga Meskauskaite, outlined the methods typically seen across the board:

  1. Ratio method

This is the most simplistic LTV projection, which considers historical averages and benchmarks. It’s simple to calculate and easy to improve.  Multiply Day 7 Revenue by Coefficient to get Day 90 and Day 180 Revenue.

  1. Retention Approach

This approach requires no historical performance data. By modelling real-time retention with a power function: y = a * x ^ c you can estimate the number of user days that a cohort is active. This can be multiplied by an ARPDAU to predict LTV.

  1. Monetisation approach

This method still takes into account the users but tries to model how much money you’re making over time and how it slows down over time. You can model real-time cohort revenue using a log function: y = c * ln(x) + b to estimate the LTV for a date in the future.

 

4. You need a strong product, built with UA in mind 

In this day and age, the best marketing in the world can’t mask a bad product. Our experts were united in this viewpoint.

Lucienne Gillen, Mobile Marketing Team Leader at photo printing app Pixum sees the app or product itself as the most important aspect of successful UA. “It is better to focus only on one app instead of having multiple. If this one app is done well, and it receives very good reviews, all of the marketing activities perform much better.”

Enric Pedro alluded to the change in Lab Cave’s strategy for the upcoming new year. He sees the biggest learning of 2018 to be “developing more polished apps, slower paced releases and making sure that you check all the boxes when it comes to having a proper mobile app strategy in place.”

 

  1. Alignment and education across departments is vital

Keeping all departments informed about what is happening in UA was acknowledged by our industry leaders as vital for the success of the business, and one of the key learnings of 2018. “We make sure that at the beginning of the year our goals are aligned with the product team,” said Selina Springvloet Dubbeld, Head of UA at Wargaming.

“If we all align to the same kind of goals, our job is just to bring in users that adhere to the day 1, day 3 goal, the rest is up to the product team. This means we are able to communicate with the product, product marketing, BI and creative teams to ensure we’re all looking at the same set of goals. This way everybody knows what we need to scale to work. We can then all be aligned to reach those goals”.

Similarly, Arthur Chin Head of UA at gaming app TreasureHunt recognises that “working closely with other departments to ensure maximum marketing learnings across disciplines” as his single biggest learning of 2018.

 

  1. Pinterest is a great channel to tap into

Adopting new channels to scale your app business is important in the ever-evolving world of app marketing. While the duopoly of Facebook and Google remain the best performing user acquisition channels in terms of ad spend and ROAS, 2018 has seen Pinterest rise up the ranks.

Lucia Mrvová, Head of UA at fitness app 8fit, notes that Pinterest is her best performing UA channel, on a par with Facebook. Ivan Ravovoy, Head of Marketing at lifestyle app  Verv, agrees that 2018 was the year for new players – including Snapchat and Pinterest generating great returns.