Mobile Advertising Pitfalls and Best Practices

This interview with AppLift’s CEO Tim Koschella first appeared on Thalamus here.

For those of us that aren’t familiar with AppLift, please tell us a little more about your company and core offering.

AppLift is a data-driven technology company that empowers mobile app advertisers to acquire and re-engage quality users at scale on a performance basis. AppLift’s programmatic media buying platform DataLift provides access to all automated supply sources in the market, reaching over a billion users. The technology leverages first- and third-party data to optimize media buys across all stages of the conversion funnel; and through its proprietary LTV optimization technology, enables ROI-maximized user acquisition. AppLift is trusted by 500+ leading global advertisers across all verticals, such as King, Zynga, OLX, Glu Mobile, Flipkart, Paltalk, Nexon, and Tap4Fun. AppLift is headquartered in Berlin and has offices in San Francisco, Bangalore, Seoul, Singapore, Tokyo and Beijing. The number of employees have grown from 5 to over 240 in 3 years.

AppLift recently purchased Mobile DSP Bidstalk based in India, and re-branded the company as DataLift. What was the reason for the acquisition and what new capabilities does DataLift bring to the table for AppLift clients?

From the early days of AppLift, there was the realization that technology was going to become ever more important as the industry matured. We also believed that getting the right users at the right price for our advertisers was paramount. Over the last couple of years, the technology for programmatic advertising, and RTB (real-time bidding) has improved considerably. RTB allows advertisers to bid on every single impression a specific price which, which will be a function of what is known about the user who will see it. This way advertisers do not pay more than they are willing to for each new user. In this context, in May 2015 AppLift bought Bidstalk, a mobile DSP based in Singapore with an important R&D center in Bangalore. AppLift chose Bidstalk because it had one of the best, most efficient and most scalable technologies in the market. Bidstalk is a technology-first company, and its team had over 40 engineers out of its 50 employees. We integrated their team and technology to our existing programmatic media buying product, DataLift, and Bangalore became our second R&D center after Berlin and our seventh global office.

The mobile ad network space is extremely competitive, with thousands of networks and DSPs vying for the attention of brands and app developers. What do you think makes AppLift different?

Our proprietary “LTV Tracking and Optimization” technology enables our advertisers to maximize ROI on their user acquisition campaigns by optimally allocating their marketing budget to the various traffic channels available on our platform. We make sure to focus on monitoring post-install events, i.e. events happening within the app that serve as proxies for the quality of a new user. These can be retention rates, the percentage of users that finish a tutorial, etc. Also, to further improve the general performance of our campaigns, we use machine learning technology to A/B test campaign creative at scale and optimize for the highest click-through rates. In general, we firmly believe in a data-driven approach to user acquisition and re-engagement.

Fiksu recently reported that the cost to acquire a loyal user on mobile has reached a record high of $4.23. Do you think that these sky high CPI rates are sustainable for marketers and app developers? How do you see this CPI and Cost-per-Loyal User rate evolving over the next few months or years?

There is no denying that CPIs are high. However, there are a few things you need to look at. First of all, this figure is an average and you can find great differences across countries, verticals, and obviously operating systems. Then, it can be misleading to look at CPIs alone: what matters is the final profitability, that is whether the lifetime value (LTV) of the users is higher than the cost paid to acquire them. A strong recent industry development, and this is a trend that we at AppLift pushed forward since our inception, has been about LTV optimization and going for that quality factor. In this sense, we don’t see the rise of CPIs necessarily as a bad thing, it is also the sign of increased scrutiny and a push for quality across this industry.

From your internal data, what are some average CPI rates you’ve seen across each app genre, and geo?

The most popular verticals we’ve seen for mobile advertising globally are gaming, personalization, utility & productivity, shopping and lifestyle, travel and navigation, news and magazine, health and fitness.

Are there any innovations happening in mobile right now that excite you the most?

Of course, today everyone talks about VR and AR. In our field of expertise, which is mobile advertising, there is no doubt that programmatic is going to revolutionize how ads are served to mobile users. Currently, the main issue with mobile advertising, and digital advertising in general, is its lack of relevancy. Programmatic, through its ability to leverage a myriad of data points about users, their location, their centers of interest, actions, etc., will finally make it possible to serve ads that users actually want to see and offer value to them.

What are some tips you have for mobile app developers just starting off, in terms of user acquisition and retention? Each day there are new apps in Apple Store and Google Play. How does your app stand out from those thousands?

That’s the first critical question mobile app developers must ask. Is your app solving a problem, or bringing a utility to the customer each day for them to come back? Build a product that has some value to the consumer. Getting the users to download your app is only the first step of the conversion funnel. If you don’t actively engage them with your product, it is a waste. Some of the most important tips for mobile app developers are: optimizing the app store page, building a community, tracking advertising campaigns, being active in social media. Retargeting campaigns and integrating with a popular app are also some of the factors to look into for acquisition and retention. Before you get into a paid acquisition strategy, consider what your goals and KPIs are because those will be a crucial factor in all your user acquisition efforts and for campaign pricing.

Ad fraud is rampant in mobile, especially for fraudulent mobile app installs. How do you think that we, as an industry, can combat this?

There is an increased awareness of the issue, and tolerance towards fraud is rapidly decreasing from all sides of the ecosystem. We believe that every stakeholder of the ad tech ecosystem should be held accountable in the fight against fraud. As a demand-side platform, our advertisers’ interests are most important. We recently published a global study on ad fraud and the results revealed that a staggering one-third of the mobile traffic is at the risk of fraud. Our goal with the study is to raise awareness about the issue of fraud within the mobile programmatic ecosystem, as this specifically hasn’t been touched on before. In the future, we plan on releasing similar studies on a regular basis, in which we will most likely also publish qualitative conclusions. However, ad exchanges and supply-side platforms also have their share of responsibility in rooting out fraudulent publishers. The supply players we work and are integrated with are taking measures against fraud, such as immediately banning fraudulent publishers blocking payouts, even retroactively. As for every criminal activity, we will never be able to totally eradicate fraud but, if all parties work together, we can seriously curb it.

Other than ad fraud, what do you think are the biggest challenges the mobile ad industry faces today?

Ad blocking is another threat that the industry is facing currently. There are nearly 200 million monthly active users (MAU) of ad-block software globally. That represents a big uptick in ad-block usage from nearly a year ago. However, ad blockers do not aid in developing a sustainable revenue model for publishers in the long run. Some publishers even choose to not display content when a user has an ad blocker installed on their mobile device. Instead of fighting ad blockers head-on, the industry needs to find ways to coexist with them. For instance, the Interactive Advertising Bureau (IAB) recently announced that it would create a working group and an online hub to help publishers deal with ad blocking softwares. As such, ad blockers do not put a blanket ban on all ads, therefore the industry needs to come up with ads that are non-intrusive to the consumer experience on mobile. While it is a concern for the industry as a whole, this signifies a shift in advertisers’ approach to cater towards consumers by ensuring better quality ads as well as improved targeting capabilities.

Lastly, what do you see as the future for mobile user acquisition?

For us, the future of mobile user acquisition lies in the promise of ever more relevant and efficient advertising. With advancements in programmatic technology and increased data integration both in scope and in scale, serving “the right ad to the right user at the right time” might just become reality. There are still a lot of hurdles to get there, but we are on the right track. It’s also important to mention that better user targeting and improved ad relevance need to be done in full compliance of the strictest user privacy regulations, because none of this can be achieved without the buy-in of the end users.