Analysts predict that mobile ad revenues will blow past desktop ad spending as soon as 2016. However, the mobile marketing market is not as concentrated and mature as the desktop one: new technical solutions and new partners appear every month thus allowing a grey area to subsist in this market. This is also due to a lack of standards. People think that mobile advertising is expensive and not profitable for premium advertisers. They are wrong.
So what can premium advertisers do to be profitable with mobile marketing campaigns?
It’s true cookies don’t exist on mobile unlike on the web. But tracking SDKs exist that can match a user with the right acquisition source. It allows you to measure various indicators of your choice (subscription, click, in-app purchases). These SDKs give you data for every user and every acquisition source. This way you can measure the associated revenues and see if you are profitable or not. SDKs are becoming more reliable as the market ages and are accepted by a large majority of acquisition sources as a reference for invoicing. Adjust, Appsflyer, TUNE, Kochava, etc. are some examples of the main SDKs on the market.
What to do to be profitable then?
- First of all, you need to diversify acquisition sources as much as you can. The mobile ad market is very competitive: demand exceeds supply, thus creating a tension on prices. As a consequence it’s also difficult to drive high volumes of users. In addition to that, the available inventory is much more divided on the mobile ad market with more than 500 sources available: not one company owns more than 20% of the global inventory for example. Hence the need of diversifying acquisition sources in order to drive significant volumes of users at a reasonable price. Advertisers can launch campaigns on Ad networks (Admob, iAd…), social networks (Facebook, Twitter…), Video Ad networks (Vungle, Adcolony…), DSPs, Ad exchanges, real time apps… You can also deal with companies like Addict Mobile or GrowMobile that assemble all these sources and adapt investments according to the ROI of each source. It’s a technological challenge because each source has its own environment. Multiplying sources allows you to increase the global traffic of users for which you can print ads on the one hand and optimize your ROI on the other hand. When you stick to a few sources, the higher the volume, the higher the price.
- Favor CPI, CPL and CPA bidding models. A great variety of sources imply a great variety of business models. CPM/CPC campaigns (Cost-Per-Mille/Cost-Per-Click) can be tricky. You need to pay close attention to the evolution of the campaign to be profitable because expenditures can increase rapidly. CPI or CPL/CPA models (Cost-Per-Install/Cost-Per-Lead/Cost-Per-Action) are a safer bet because users acquired this way are more valuable. The right thing to do is to calculate the average acquisition cost of a user, a subscriber or a buyer for each source. You can compare this cost to the estimated income that a given type of user is likely to represent and then optimize your spending. This step is essential if you want to invest more money on efficient sources and cut expenditures for non-profitable ones.
- Like on the web, more and more possibilities of targeting and retargeting are available for marketers on mobile. There are a lot of accurate criteria you can target your audience with (geography, gender, age, phone model, internet connection type, hobbies, other apps used, buyer…). When you use it wisely it can significantly improve the profitability of your campaigns. You can also use retargeting (the practice of serving ads to users who have previously used your app). But, remember, the market is highly competitive. Your competitors probably want to target the same audience as you do. Prices will tend to go up in this case. That’s why you need to run some tests. The goal is to identify profitable segments of the audience that are relatively less competitive. Testing is mandatory if you want to optimize your ROI: depending on the banner you use in association with the chosen targeting criteria, profitability can vary by a factor of 100. Technological tools exist that allow you to run lots of tests at the same time. Predictive algorithms are also appearing on the market. They combine data of past campaigns and those of the first tests for new ones and can predict the best marketing mix (targeting criteria, acquisition sources, price) thanks to machine learning.
- Finally you need to spend some time optimizing your ROI in real time. It implies daily data analysis for each source of every campaign. That’s the only way to be profitable in the long run. In order to analyze huge amounts of data and to automate the optimization process, technological tools such as Addict Mobile Technology are your best option if you want to be more efficient and save yourself some time to focus on other topics!