IAC’s Mosaic Group: Games Get All The Attention, But Utility Apps Are Super Lucrative

Mosaic Group, IAC's global app division, is probably one of the biggest mobile app developers you’ve never heard of.

It owns 40 utility apps, including RoboKiller, the largest spam call blocker in the United States; iTranslate, the translation app with the greatest penetration after Google Translate; and the hugely popular Daily Burn fitness app.

Mosaic has more than 40 million monthly active users, around 200 million annual downloads, 3.8 million subscribers and recently hit the 1 billion mark for lifetime installs across its portfolio. The group brought in just shy of $200 million in revenue last year.

This is clear evidence that games aren’t the only game in town on the app front, said Zach Roseman, who took on the CEO job at Mosaic in February after leadership roles at IAC corporate and Apalon, the mobile development company IAC acquired in 2014.

“In today’s media world, all of the credit goes to games, but we have a conviction that the mobile app story is about more than just games,” Roseman said. “Seventy to 80% of app store revenue worldwide is happening in games right now, but projections call for that to be closer to 50/50 within the next few years."

Roseman spoke with AdExchanger.

AdExchanger: What is Mosaic Group’s strategic vision?

ZACH ROSEMAN: We build and acquire best-in-class products that people use in their everyday lives. You can think of us as doing for the productivity and utility space what Zynga or Stillfront Group is doing for gaming. It’s a portfolio approach.

Is Mosaic on its way toward becoming its own stand-alone company?

Historically, if a division within IAC becomes successful enough, it gets spun out to be its own independent company, which is what they did with TripAdvisor, LendingTree and a host of others. Match Group is in the process of being spun off. Right now, Mosaic is part of IAC Applications. We’re the largest business in that group.

Why do you build what you build and buy what you buy?

Every one of our studios has its own product road map. This is true for all of our products, whether it’s our RoboKiller app or we’re building something new.

We do the analysis to see how much time and how many resources it will take to develop something or whether it makes sense to acquire a high-quality, smaller competitor. We also make larger, more strategic acquisitions to help us get into big categories faster. The translation category and call blocking/privacy are both good examples.

But the acquisitions we make are about more than just buying IP that we can take over and develop internally. We’re looking for teams that have built a culture and a story around a particular category.

Are you still making acquisitions in light of COVID-19 disruptions?

IAC has been conservative in its cash position, and we have over $2.5 billion on the balance sheet, which we’re looking to deploy where appropriate. There’s a pretty high bar to get an acquisition done right now, but IAC was built by being acquisitive. Mosaic Group is actively engaging now on a few smaller acquisitions where they have a product we think we can grow faster and better internally.

How do you decide on the right mix between monetizing with ads and subscriptions?

That is a question we wrestle with every day. The fact is, there are some utility products where subscription-first makes sense, and others where it’s not the best business model. At the same time, only a single-digit percentage of traffic will ever pay you for a subscription. This is true across the board with very few exceptions. The majority of users are free users and happy to stay that way.

What is the right level of monetization for those users? Some users will stop using a product or even leave a bad review if they see an ad, and others recognize that if a product is free, there has to be a value exchange, as long as it doesn’t interrupt their experience.

We have ad units in our products, but they’re becoming less of a contributor to overall revenue even as we continue to think about how to diversify our business.

You recently hit 1 billion installs across the portfolio. But how do you think about retention?

We have product teams focused on engagement, like how many times people are coming back. But we also have what I call our North Star metric, which is: What is the key action we want to drive? The more documents you scan and sign in our Scanner for Me app the better, but it’s not just about scanning, because you could scan something, be really disappointed and leave. The question is, how many scans are you sharing?

Session count is important, but it’s more about trying to understand the value we produce.

Have you noticed any engagement trends during the quarantine period?

The fact that we have a portfolio of products and that we’re primarily a subscription business has helped us be more resilient. But we also have our share of challenges. For example, a lot of people use translation apps when they travel, which means iTranslate has been highly impacted.

Some of the engagement trends we’re seeing are obvious. People aren’t at work, but they still need to scan documents, so they use Scanner for Me. SnapCalc can help with homework. At Home Workouts by Daily Burn – the name says it all.

But we’re also seeing some non-obvious impacts on engagement. In our Productive app for habit tracking, for example, hand washing has become one of the most-used habits.

And then there are the second- and third-order effects. With countries under lockdown, the call centers responsible for spam calls have been closed and so the overall number of spam calls blocked by RoboKiller is down by 35%. And that means there’s less search interest in apps for blocking spam calls right now. At the same time, the spammers who are getting through are adjusting their scripts. Now they’re trying to scam people out of unemployment benefits or PPP loans.

This interview has been edited and condensed.

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