In this week's Whiteboard Wednesday, Localytics Vice President of Business Development, Brian Suthoff will teach you the appropriate user tracking techniques, how to optimize customer acquisition spend beyond just download numbers and how to focus your efforts on generating the most customer lifetime value.
Hi, and welcome to another Whiteboard Wednesday. My name is Brian Suthoff, and I'm Vice President of Business Development at Localytics. Today I want to talk about measuring and optimizing ROI of your customer acquisition campaign. More and more app publishers and owners are spending money advertising their apps on mobile phones and tablets, with the eventual goal of driving new user growth, engagement, and eventually revenue. With 80% of mobile data usage coming from apps, most of those ads end up appearing in apps. How you measure ROI in that environment is a little different than the web. Measuring the I, of course, is still easy. That's the amount of money that you spend on advertising. Measuring R is very different in apps, and let's jump into some of the details.
The biggest difference in apps is that you do not have cookies, which is what most marketers are familiar with in the web world. Instead, we have another set of I.D.s, which in many ways function better than cookies, but can seem a little new and different for the first time. So let's go through them a little.
The first is the advertising I.D. This is provided by Apple in iOS 6. You can basically connect the advertising I.D. or the IDFA, as it's often abbreviated, of a user who clicks on an ad with the IDFA of a user when an app is started for the first time. Connecting those two makes a successful attribution.
On Android it's a little different. In Android, there's the Google Play Refer. This is the ability to pass parameters along with the link to Google Play when somebody clicks on an ad. Then when the app is started the first time, those parameters can be broadcast or shared to the app. Localytics automatically records them, and that provides your attribution information.
It's also worth remembering that a lot of app developers and owners have their own customer I.D.s for registered users, subscribed users, which is very useful for cross promoting. So if you email users or advertise your app on your own website, you can use the internal customer I.D.s you already generate to connect those activities.
Lastly, we'll talk a little bit about fingerprinting. Fingerprinting is an effort to use a number of non-unique I.D.s, but combine them in a way that you, at least with a degree of confidence, can determine that this is a unique device. It works well in some cases, not as well in others. Another consideration, given the amount of data collected, is that companies should check with their own privacy policies and with their local regulations.
Now that we've made the attribution, more interesting is how we use that information to optimize our campaigns. The first and most obvious method is to optimize your campaign spend around new users. So using analytics to view all the new users of your app, and then split that out by what ad partner they came from, or what campaign contributed to that new user, and then shifting spend where most new users are coming from. However, Localytics has found and published in research that about 22% of your new users only use your app one time. Obviously, you don't want to spend too much money acquiring those users.
Stepping up in sophistication is to optimize your campaigns around retention. Localytics automatically creates cohorts of users based around when they first start using the app, and then measures how those users are retained in the following days, weeks, and months. Splitting that by the ad partner, publisher, or campaign, can help you understand which are generating or contributing the most new users, and then shift or spend towards those sources.
And lastly, really the closest to R, measuring return, is to tie performance back to LTV. So in your analytics, you can record a value with every subscription, every product purchase, every ad view, and compute a total customer lifetime value, or LTV score, for your users, segment that by the same channel sources or campaigns, and shift your ads then to those that are generating the most actual value. That gives you a complete picture of your ROI from advertising campaigns.
After you've optimized your ad spend, you can still use other marketing efforts to continue to drive your ROI and lifetime value efforts. One of those is to use information you acquired through the attribution methods to optimize the messages you send to users, either in app or through push. For example, you might give users acquired through Facebook a message specifically tailored to them, and suggest that they share information about their experience with your app with other friends of theirs on Facebook.
Thank you for joining me for this week's Whiteboard Wednesday. Again, my name's Brian Suthoff, Vice President of Business Development, and hope to see you again next week.
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