Attracting mobile users is pricy. Attracting the right mobile users is even pricier.
Cost per install in September was $1.53 on iOS and $1.88 on Android, a 24% and 87% YoY increase, respectively, according to the most recent data from Fiksu. The cost to acquire a loyal user, defined as someone who opens an app three times or more, increased nearly 80% from $2.25 to $4.05 in the 12 months beginning last September.
“But if apps are acquiring users that do not become customers, then all they are doing is losing money,” said Moshe Vaknin, CEO and founder of mobile ad network YouAppi, which rolled out cohort analysis functionality to its platform on Tuesday.
Cohorts are groups of people who share some commonality. YouAppi has direct relationships with roughly 3,000 apps and mobile sites, through which it collects 25-plus data points, such as carrier, device type, age, gender, location and keywords.
The tool observes the behavior and download patterns of roughly 1.1 billion users to generate audience segments around topic areas like travel, entertainment, gaming or shopping.
Over time, an algorithm predicts which user groups are most likely to convert and have the highest lifetime value with certain apps. Those are the users to target for the least amount of waste – a “customers who bought this item also bought…” type of recommendation. Users who download travel apps also download particular utility apps with a level of statistically relevant frequency, for example, or users who download particular shopping apps also download couponing apps or loyalty-centric apps.
The point is to be as cost-effective as possible in targeting the users most likely to spend money or engage in post-install activity, like a sign-up or a subscription.
“Around three years ago, it was all about driving cheap installs, as cheap as you could get them – now, CPI [cost per install] isn’t even a metric we really report on,” said Atlee Cheema, an account director at mobile agency Fetch, a customer of YouAppi’s since early 2014. “It definitely takes more money to acquire a valuable user, but at the same time, ad networks have become more sophisticated for targeting and there are more buying tools to leverage on the back end.”
But there’s no point in shelling out to acquire a user that isn’t likely to fulfill whatever the advertiser’s KPI is, whether that’s post-install conversion or retention. For one Fetch client, a utility app with a global presence, YouAppi drove more than 100,000 qualified users over the course of a year – specifically, users who weren’t likely to churn. For that particular client, it was retention, not fulfilling a particular direct-response goal, that proved ROI.
“We’re all about trying to get smarter with our media buying and planning,” Cheema said. “With a lot of networks out there, you give them a $20,000 IO [insertion order] or whatever the amount is and they cast a wide net without any real thought to where they’re placing the media. We’re looking to dedicate those dollars to a more strategic approach, rather than just seeing what sticks.”
Vaknin likens the results of cohort analysis to what a dating app algorithm does.
“We’re using a scientific method to make a match,” Vaknin said. “To use data to help us predict whether certain users are a match for an app or not.”
In addition to Fetch, YouAppi’s clients include Expedia, Hotels.com and Skype. The company, which increased headcount to 40 from around 15 employees over the past year, maintains its headquarters in New York, with additional offices in San Francisco, Berlin and London, and an R&D outpost in Israel.
Vaknin told AdExchanger that YouAppi, which announced $3 million in Series A in October 2014, is in the midst of raising another round that’ll likely fall somewhere between $10 million and $15 million.
