2018 Predictions: Headway

Michele Webb, general manager, US, at Headway, offers four goals for mobile app performance marketers in 2018

According to comScore, consumers spend nearly half of all time spent interacting with digital media in apps on their mobile devices. It’s boom time for mobile app marketers, and many are attracting sizeable investments from VCs or angel investors.

But with money comes fraud, and marketers are struggling to find ways to eliminate it. At the same time, both they and their investors want to see their marketing initiatives deliver tangible business results. To meet both these objectives, I propose that marketers set the following goals for their performance campaigns in the coming year.

Fully embrace transparency: buying inventory on a CPM Basis
I’ve noticed a pivotal change in the way mobile app marketers are beginning to buy inventory for their performance campaigns. More and more they’re retiring CPI/CPA models offered by traditional network buys, favouring a performance-oriented CPM model in its place.

There are numerous reasons for this shift. Marketers want more transparency into where their ads appear and how they’re served. They’ve grown intolerant of the black boxes that seem part-and-parcel to the arbitrage models used by ad networks and affiliate networks. Fraud is a notable challenge with blind arbitrage, and marketers have no one to hold accountable for the fraudulent conversions they’re asked to pay for.

This compares to a CPM model in which inventory can be purchased directly from publishers themselves, through PMPs or other direct integrations, and from transparent programmatic media partners. Site and app names are clear, raw media costs are transparent in many cases, and if they encounter fraud, marketers know exactly who is responsible for it. More importantly, they know exactly which media sources and audiences yield the highest ROAS and LTV.

There is indeed still value in CPI. However, if you don’t buy inventory via a CPM basis currently, I strongly recommend you switch tactics to diversify your cost model approach in the New Year.

Focus on the lifetime value of new users
Although it’s traditional to optimize campaigns based on CPI or first-event CPA goals, such KPIs can be short-sighted. Consumers may install an app, but never use it. Or they may use it one or two times, make one purchase, and then never touch it again. These users may have some nominal value, but why not minimize such users by focusing your media spend in new ways?

A better way to orient your spend is based on a return on ad spend (ROAS) or a lifetime value (LTV) KPI, which seeks to acquire new customers based on their overall impact on the business. Optimizing via LTV is possible with the aid of a Mobile Measurement Partner (MMP) that can deliver downstream data to you and your media partners.

For example, let’s say a marketer for a food delivery app wants to find new customers who are frequent buyers. Within a specific ad campaign, an MMP allows the marketer to track the number of orders and order/cart value per unique user, and can optimize all media spend to sites or apps that achieve the best potential LTV

If you haven’t already done so, understanding user patterns to extrapolate LTV projections based on user behaviour will be key to succeeding when you switch to this type of optimization.

Better align how all partners are incentivized
When companies seek rapid growth, they’ll embark on activities without considering whether the top-line and long-ail incentives are properly aligned.

Here’s a scenario I hear all too often: an investor or company executive tells a mobile app marketer that the company needs to spend $2m acquiring XX number of new users/orders by the end of the quarter. This objective may very well exceed market realities, but seeking to meet the directive, the marketer instructs his or her media team to spend that money (with basic KPIs) or they won’t hit their quarterly bonus. The media buyers, in turn, aren’t as discerning about fraud or profitability, because they’re operating on a volume-based incentive and so are all of their media outlets. People do what you incentivize them to do, period.

A better approach is to establish incentives that encourage everyone in the chain to focus on a fraud-free environment, optimizing on LTV calculations rather than simply acquiring new users or large volumes of un-screened traffic. I realize that such an approach may require marketers to push back on their investors and executive management, but ultimately it’s the right thing to do.

If you are an investor or running a media buying team, I urge you to listen carefully to the ground-level staff you have entrusted with your investments and resources. They just might surprise you and save you a ton of money.

Make transparency – and honesty – the default
In every situation, in every scenario, it’s best to be upfront and honest as to what media sources are able to offer, and what a marketer is actually buying. If a marketer demands transparent, direct, fraud-free traffic 100 per cent of the time, then he or she may need to compromise on cost-model, pricing, reach and scale.

For instance, let’s say a sports publisher wants to launch a custom app for the upcoming Winter Olympics. There is a small window of opportunity to market that app. Target sports fans too soon and they’ll ignore the ads because they’re not relevant, and target them too late and the marketer misses opportunities to engage the users. Given the short opportunity to promote the customer app, the marketer may have little choice but to purchase risky inventory to achieve scale. This may be acceptable, but only if the marketer fully understands and acknowledges the risks involved.

There will always be cases where marketers and media partners need to seek a middle ground, and work to combat fraud while hitting scale goals. When scale is needed on a short timeframe, black box inventory may be a requirement, even though it’s less than ideal.

In every scenario, an open and honest discourse between media buyer and media seller will always yield the best results.

I’m optimistic about 2018. I believe it will be a year when mobile app marketers will hone their skills for their performance-based campaigns, delivering the kinds of results their companies need in order to grow. By adopting these goals, marketers will go a long way in securing their company’s long-term success.