As Mobile App Marketing Gets Pricy, Apsalar Looks Past Installs

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App marketing is often about incentivizing downloads, with little thought given to post-installation engagement. For obvious reasons that's not workable for free or "freemium" app developers who make their money after the install.

Apsalar is trying to address this. The two-year-old firm began with a mobile analytics platform that later became the foundation for a targeting product, ApEngage.

AdExchanger spoke with CEO Michael Oiknine.

What problem is Apsalar trying to solve?

MICHAEL OIKNINE: We're a data driven platform for acquisition and retargeting of high value users in the mobile application ecosystem.

That ecosystem is presenting a lot of very acute problems.  Some are more acute than the one that we see online. Imagine that problem is an iceberg and the tip of the iceberg is the fact that you have probably 1.3 million mobile apps right now on iOS and Android trying to get into the hands of [users].

To exacerbate that problem you have a few app markers at the top end of the range trying to acquire users at a bigger velocity than others. It has created a huge imbalance in terms of supply and demand. Too much demand, not enough supply of consumers, and that has translated into very high cost per install, or what we call CPI.

About 18 months ago, on iOS you could get a download or a user install for about thirty-five cents. That was a non-targeted incentivized install.  That same non-targeted incentivized install on iOS today is probably at $1.50.  It's not uncommon to see the CPI go all the way up to four or five dollars today.

That gives you a sense of the inflation. But that's only the tip of the iceberg. The real problem starts after that user has actually installed your app. If you put aside the key apps that you're using on your Apple or Android phone every day -- your mobile web, your telephony, and your messaging app -- the average human being is spending about an hour every day on low-key apps.  Here is the big bad news for developers or app marketers; they're actually spending that hour across a handful of apps. That is a big problem because you have spent a lot of money to acquire that user, and that user doesn't open and engage and use your app.  You have a very low chance of having a lifetime value that is going to be superior to that CPI, to that customer acquisition cost.  It becomes a non-sustainable approach.

It's a big problem. How do you solve it?   

[Our product] ApEngage came on top of our mobile analytics platform that has been widely adopted for the last 12 months. You can target users for acquisition. We let customers acquire only out of a pool of users that have the highest likelihood of being the type of users that will show high financial return.

We let them select from audiences that are affinity oriented. We've used more than 230 million user profiles across 100 billion in-app user interactions. We cluster users in terms of their affinity with types of apps. It's called principal component analysis.

The second thing we provide is the ability to target by the specific behaviors that they want within that affinity group. For example, highly engaged frequent app users, people that have a high propensity to make in app purchases.

Are most of your customers the marketers offering paid apps, or are you looking at a combination of paid and free?  

It's a combination.  It doesn't have to be a paid or free app but the reality of the market is that probably the majority are free apps that are looking to monetize within the app.

Is App Engage your first advertising product on top of the analytics?

We came out with a retargeting piece of App Engage about three months ago. The new thing is allowing you to do the user acquisition by audience.

How do you view the mobile cookie challenge?

There is a great light at the end of that tunnel now.  A couple months ago the tunnel was really quite dark.

Apple didn't mean for its user device identification (UDID) to be used from a marketing standpoint, but that's what the mobile marketing industry has done. By virtue of its uniqueness, UDID has been a very good proxy to identify a user. It started by being used for attribution and naturally evolved for identifying users in general.

At WWDC, Apple [said] iOS 6, which is coming in September, [will have] an ID for advertising. Basically for all purposes that ID works exactly like the UDID but has and will have a privacy framework, an opt out framework, attached to it at a network level. We think this is going to be extremely good use for the industry. First, Apple is behind it, and Apple being the market maker, everybody will follow behind in a matter of weeks. Second, it will allow for better and cleaner attribution in the market.

And what about Android?

There's never been any confusion around the Android ID. Google has never mentioned anything about not being able to use the Android ID for either attribution or targeting.

This is because of two things. The first one is Google has more of a targeting DNA than Apple has. The second is that with Google Play, the marketplace of Android, if you want to push an app on Android, you just push it. There is no review process.  There is no opportunity for the guys at Google to stop something.  It's been okay.

Who's in your competitive set?

There are plenty of players that provide solutions for mobile app marketers to get downloads. You have people that are in the business of providing non-targeted incentivized downloads, basically people like Tapjoy. Flurry as well has an offer for incentivized downloads, and that has been probably the most used way of acquiring downloads in the last 12 months.

The problem with this approach is non-targeted incentivized downloads [deliver] probably the worst type of users you can get when it comes to that mindshare war that I mentioned -- people that will almost never open your app after downloading it because they were only interested in getting your incentives.  The industry has been in search for a solution that could both scale but also provide high quality users that will engage with and monetize with your app after that.

I don't think that there is another solution that is taking the Apsalar approach of audience targeting to that problem. This will probably change in the future, but at this point we are enjoying the fact that we are probably the only one doing it this way.

Can you say anything on revenue or profitability?

We're not profitable and we're not going to be profitable for a while.  This is a market that in full extension and it's about fronting marketing and capacity expenses to gain market share.

Follow Michael Oiknine (@moiknine), Apsalar (@apsalarinc) and AdExchanger (@adexchanger) on Twitter. 

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