Mar­keters work­ing with­in the mobile ad indus­try know how fierce the com­pe­ti­tion for user acqui­si­tion can be in the app pro­mo­tion space. It’s expen­sive to acquire new users and many times the cost per install or cost per action that adver­tis­ers get in their cam­paigns is high­er than the goal itself.

Under these con­di­tions, it’s no sur­prise to see mar­keters ded­i­cate a lot of time and effort to user acqui­si­tion: they do a lot of test­ing with dif­fer­ent cre­atives, dif­fer­ent traf­fic sources, and dif­fer­ent tar­get­ings in order to opti­mise results and get clos­er to their KPI objec­tives.

Retention – the ‘unattended’ challenge

How­ev­er, the hard work is not com­plete when adver­tis­ers are able to gen­er­ate new installs or even in app events under the pric­ing goal: they still need to deal with the very high app aban­don­ment rates that exist in the mar­ket. App engage­ment rates are often real­ly low, which makes sense in a mar­ket where thou­sands of new apps are launched every day.

In fact, every user has dozens of apps installed in their devices, so the com­pe­ti­tion for user inter­ac­tion is quite strong. Dif­fer­ent stud­ies in the mar­ket show about 25% of installers only open/interact with the app once before they unin­stall it. And push noti­fi­ca­tions are often inef­fec­tive as users tend to ignore them.

So, not only is acquir­ing new users dif­fi­cult: retain­ing them is a big chal­lenge as well. Nev­er­the­less, too often we see mar­keters focus­ing their efforts on opti­mis­ing user acqui­si­tion cam­paigns rather than on reten­tion. This can some­times be a prob­lem: spend­ing time and mon­ey get­ting new cus­tomers to down­load an app does not gen­er­ate much val­ue if they don’t con­vert or only con­vert once. The real impact comes from the recur­rent users that use the app (and con­vert) on a reg­u­lar basis.

Retargeting as the solution

An appro­pri­ate and well man­aged app retar­get­ing cam­paign can have an sig­nif­i­cant direct (and pos­i­tive) impact on the advertiser’s bot­tom line. If they can get their users to use the app more often, spend more time on it, com­plete actions and repeat­ed­ly inter­act with it, they will be able to gen­er­ate more rev­enue. Con­ver­sion rates will improve and so will the life­time val­ue and ROI.

There are many options when it comes to retar­get­ing users. Mar­keters need to con­sid­er the spe­cif­ic con­di­tions of their busi­ness to decide what makes sense to test.

Let’s see a few exam­ples of cri­te­ria that may make sense for some busi­ness­es:

  • Actions per­formed by the user: It’s impor­tant to mea­sure not only the rev­enue gen­er­at­ing events inside the app, but also some inter­me­di­ary ones in the fun­nel. This way adver­tis­ers can seg­ment groups of users based on the actions per­formed or not per­formed and estab­lish com­mu­ni­ca­tions aimed at bring­ing them clos­er to com­ple­tion of the fun­nel
     
  • Num­ber of times a user has used an app: it is often a good idea to divide the tar­get­ing in groups of users accord­ing to their matu­ri­ty with the app. For exam­ple, a prod­uct dis­count might work bet­ter for a user that has only opened the app a cou­ple of times, while an ad for a com­ple­men­tary prod­uct can be suit­able for mature users that have already pur­chased oth­er prod­ucts
     
  • User loca­tion: Many times, the loca­tion of the user can pro­vide valu­able infor­ma­tion to achieve bet­ter results. Adver­tis­ers can use it to show ads to users that are phys­i­cal­ly close to a store, or to pro­mote a prod­uct with high stock on cer­tain regions, or to peo­ple that based on their loca­tion are like­ly to be inter­est­ed in some­thing (trav­ellers at the air­ports, for exam­ple)

These are just a few cas­es that mar­keters can con­sid­er when decid­ing on the best seg­ments to re-tar­get. How­ev­er, they should test dif­fer­ent retar­get­ing cri­te­ria in order to find what works bet­ter for their par­tic­u­lar cir­cum­stance.

It is worth high­light­ing that many adver­tis­ers under­es­ti­mate the impor­tance of retar­get­ing active users. Some­times this fact leads them to lose the oppor­tu­ni­ty to sig­nif­i­cant­ly improve their results. There are many suc­cess­ful cas­es where a brand reg­is­ters a rel­e­vant rise in rev­enue by re-tar­get­ing their most engaged users. Show­ing them an ad can bring them to the app and gen­er­ate val­ue to the adver­tis­er that would not have been gen­er­at­ed oth­er­wise.

What is crit­i­cal to under­stand is whether your retar­get­ing cam­paigns are being suc­cess­ful, as opposed to just throw­ing mon­ey to users that would have been as engaged any­way, in mea­sur­ing the out­come of all your cam­paigns incre­men­tal met­rics can be of great help here.

The importance of incremental analysis

Fol­low­ing the incre­men­tal­i­ty approach is the right option to not only find what acqui­si­tion cam­paigns are gen­er­at­ing most val­ue but also what retar­get­ing strate­gies are being most suc­cess­ful. You need to estab­lish the cause-effect rela­tion­ship between your retar­get­ing cam­paign and your results.

You may get great results among the users tar­get­ed by your cam­paign, (through a lot of pur­chas­es after the cam­paign, for exam­ple), but are those pur­chas­es a result of your cam­paign or would they have tak­en place even with­out it?  Incre­men­tal Met­rics will tell you. Adver­tis­ers can cal­cu­late them by divid­ing each retar­get­ing seg­ment into two groups: one that is left out of the retar­get­ing cam­paign, and anoth­er that sees the ads. Then, they com­pare how much rev­enue was gen­er­at­ed by both groups and see how much more (or less) was gen­er­at­ed by the users exposed to the cam­paign.

After cal­cu­lat­ing the incre­men­tal rev­enue and the incre­men­tal num­ber of con­ver­sions, the next step is to cal­cu­late the cost per incre­men­tal con­ver­sion – if that KPI is below the goal, the cam­paign was a suc­cess. If not, the mar­keter should try a dif­fer­ent strat­e­gy. Either way, this opti­mi­sa­tion process should be an ongo­ing effort: even when results are pos­i­tive they should be chal­lenged by new test ideas. The best DSP solu­tions do this auto­mat­i­cal­ly in every cam­paign with the click of a but­ton, but an adver­tis­er can also do it with­out a spe­cif­ic incre­men­tal­i­ty track­ing tool, sim­ply by fol­low­ing the above method­ol­o­gy.

Conclusion

The app adver­tis­ing mar­ket is very com­pet­i­tive, and adver­tis­ers must apply great effort to acquire new users at rea­son­able costs. But there is anoth­er prob­lem: app aban­don­ment rate. The num­ber of avail­able apps fight­ing for user’s atten­tion is huge, which makes it real­ly hard for a brand to gen­er­ate loy­al cus­tomers.

Many adver­tis­ers lose rev­enue oppor­tu­ni­ties by focus­ing too much on the first prob­lem. Retar­get­ing cam­paigns are def­i­nite­ly a strat­e­gy that can help to reg­is­ter a high­er num­ber of active users, and can con­tribute sig­nif­i­cant­ly to high­er prof­its. Ulti­mate­ly, incre­men­tal met­rics are essen­tial to help mar­keters find the best seg­ments and the best mes­sages to max­imise the oppor­tu­ni­ty retar­get­ing rep­re­sents.

Inter­est­ed in hear­ing lead­ing glob­al brands dis­cuss sub­jects like this in per­son?

Find out more about Dig­i­tal Mar­ket­ing World Forum (#DMWF) Europe, Lon­don, North Amer­i­ca, and Sin­ga­pore.  

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