A Comparison of Media Sources for Mobile App User Acquisition

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1 Labs Report A Comparison of Media Sources for Mobile App User Acquisition Spoiler Alert: Advantage Facebook

2 Introduction It is widely recognized that the launch of Facebook s mobile app ads has raised the bar for performance in the mobile advertising world. This new advertising vehicle, which Fiksu began utilizing in Q1 2013, has had a significant impact on app marketers and industry players alike. About Fiksu Fiksu is the leading programmatic mobile app marketing platform: 2.2B app installs generated to date 237B total events monitored 4B daily ad impressions available 300M in app events processed per day Used by 40 of the top 50 grossing app publishers Works with all leading mobile media sources addressing 99% of the available mobile media impressions: Mobile ad networks Premium publishers Real time bidding exchanges Social media Over the course of 2013, Facebook improved its ad tools and infrastructure for mobile, and use of mobile app ads accelerated, particularly in the latter half of To quantify the impact of Facebook on our advertisers, Fiksu conducted a cross-sectional study comparing performance of Facebook mobile app ads to other mobile advertising sources. Fiksu, as the industry s largest mobile app marketing platform, has a unique vantage point to quantify how this new method of promoting apps has influenced the market. Fiksu s business model is performance-based and network agnostic the choice of where to place media spend is based on which sources can deliver the most cost effective performance. In addition to Facebook, Fiksu has buying relationships with hundreds of mobile ad networks, premium publishers, and mobile real time bidding exchanges. As a Facebook Ads API partner, Fiksu provides programmatic buying and has mobile measurement access on Facebook. Fiksu Facebook Integration Fiksu is a Facebook Ads API partner with advanced technology for: Programmatic media buying and optimization Mobile measurement 2 fiksu.com/ebooks 1 Fiksu usage data, published reports of Facebook mobile app install activity

3 Why use Facebook to promote mobile apps? Labs Report It s easy to understand why marketers have found Facebook to be a highly productive source. Reach Facebook reaches over 1 billion mobile users, over half of the available mobile market today 2. Unique insight One of the biggest problems marketers have on mobile is a limited ability to understand and reach specific audiences. On the web, marketers rely on cookies for gathering insight into consumer behavior. With third party cookies effectively unavailable for most mobile activity, many marketers have been frustrated with limited targeting information. Facebook offers demographic and interest targeting, providing insight into users that is unmatched on mobile today. Measurement Facebook has strong measurement tools and APIs that allow third parties to build additional functionality to measure and optimize media spend. This makes it possible to programmatically manage campaigns, develop highly granular audiences and track campaign success for optimization. WW Smartphone and Tablet Users 51% Facebook Users Source: emarketer, Fiksu estimates 49% Other Users Performance tools and ecosystem The seemingly endless number of ways to segment and reach consumers on Facebook presents marketers with an opportunity to match the right message to the right person. Marketers have seen they can better take advantage of these opportunities with a partner who offers automation and intelligent tools. Facebook s APIs let third parties build highly efficient methods for segmenting audiences and optimizing media spend. 2 Sources: emarketer, Facebook; Fiksu estimate of overlap between tablets and smartphones 3

4 Study overview Goal Understand impact and performance characteristics of Facebook mobile app ads versus alternate non-incent mobile media sources. Methodology Fiksu generated a sample of user acquisition campaigns for 294 ios and Android apps from a wide variety of categories. Campaigns in the study were all optimized across Fiksu s broad media reach where low performing pockets of inventory are siphoned off and only best performing sources remain in the mix. Therefore, the aggregate results include the best performing traffic sources for each of the apps in the study. Sources Performance was compared across 25 top non-incent ad networks for in app and mobile web. This mix of global traffic sources includes the largest broad-based ad networks, game focused networks with unique traffic, and the top performance-oriented video networks. The sources were grouped into three larger categories: Banner networks Video networks Facebook Sample parameters The sample did not include incent sources 3. Client and app types Media sources Major brand apps, mobile games, ecommerce apps, niche apps Non-incent banner ad networks, non-incent video networks, Facebook Timeframe Q Q Conversions Apps in sample App categories 3 million conversions based on users clicking an ad, downloading and opening the app. No view-through conversions were included 294 discrete apps 40 (22 ios categories; 18 Android categories) 4 fiksu.com/ebooks

5 Metrics analyzed Labs Report Cost per click (CPC) Conversion rate Cost per install (CPI) Cost per purchaser Purchasing rate Results Results are based on an index. Banner networks, the traditional method for promoting apps, are the base for the index. In other words, performance for video networks and Facebook are expressed as a benchmark against banner networks. Study conclusions Facebook provides best ROI On the ROI metrics that drive a business, Facebook outperforms alternate media sources. From the standpoint of pure cost for media, banner and video networks are less expensive, but when looking to the metrics that drive monetization, Facebook is clearly the lowest cost, most efficient source. Given an equivalent number of conversions, users acquired via Facebook make purchases at a rate nearly 50% higher than banner networks and 12% higher than video networks. Further, the cost to acquire a purchasing user is significantly lower than other alternatives. Combine this ability to drive purchase behavior with the large volumes and expansive reach that Facebook provides, and it is evident why Facebook has become a powerful, efficient vehicle for app marketers to grow their business. 3METHODOLOGY NOTES Incentivized sources, which offer a reward or premium in exchange for a user download, have different conversion and monetization dynamics than non-incentivized ones. In addition, measurement of campaign impact on organic user lift can be subjective. (The goal of many incent campaigns is to generate additional organic users.) Incent sources were therefore excluded from this study. 5

6 Generating users: CPC, conversion rate and CPI Several key measures track the efficiency with which an ad source generates users. The conversion rate, the percentage of users who download an app after tapping on an ad, measures the effectiveness of the ad source. The cost per click (CPC) and cost per install (CPI) are measures of the cost to achieve those conversions. Cost per click The cost per click is a measure of raw media cost. Banner networks were the clear leader in generating clicks at the lowest cost. On average, generating a click on a video network was four times higher than a banner network, while generating a click on Facebook was ten times higher than a banner network. Of course, clicks don t necessarily translate into users, so it is important to examine the conversion rate and the cost per install to better determine campaign efficiency. Conversion rate Facebook was the most effective source in turning taps into downloads by a wide margin more than 2 times higher than video networks and nearly 9 times higher than banner networks. Cost per Click 1X 4.2X 10.4x 50% 250% 450% 650% 850% 1050% 1250% Banner Video Facebook Conversion Rate 1X 3.5X 8.83x 50% 250% 450% 650% 850% 1050% Banner Video Facebook 6 fiksu.com/ebooks

7 Labs Report Cost per install In contrast, when looking at the cost to generate a conversion, banner networks came out ahead, Cost per Install delivering the lowest cost per install - 16% lower than video networks and 20% lower 1X than Facebook. 1.16X 1.2x 50% 70% 90% 110% 130% Banner Video Facebook Example comparing relative CPC, conversion rate and CPI across media types Media Source CPC Conversion Delivered CPI Banner networks $ $1.00 Video networks $ $1.16 Facebook $ $1.20 In this simplified example, if a banner ad network delivered a click at 4 cents, a video network would do so at roughly 17 cents, and Facebook would top out a cost per click of 41 cents. Similarly, if a banner ad network delivered 100 conversions (installs,) Facebook would deliver 883, while a video network would deliver 366. Finally, looking at cost per install, if a banner network generated a CPI of $1.00, the average CPI on a video network would be $1.16, while Facebook would yield a CPI of $1.20. The high level of performance for conversions on Facebook can be attributed to the ability to define precise audiences more likely to be interested in a particular app. Banners offer limited targeting capabilities, and thus typically cost less on a per install basis. Campaigns that leverage numerous selection criteria, as is common in Facebook campaigns, tend to be more expensive on a media cost basis. While nominally more expensive, as outlined in the next section, they can deliver monetizing users at much higher rates. 7

8 Monetization While CPC, conversion rate and CPI are useful metrics, the key question for app marketers is whether the users generated through advertising are monetizing. It is here that Facebook demonstrably excels. Mobile apps span a wide range of monetization models and the Fiksu clients in this study reflect this diversity. To provide a normalized sample Fiksu utilized two variables for measuring ROI: purchase rate and cost per purchaser. 4 Purchasing rate The purchasing rate measures the percentage of app installs that generate at least one sale or monetization event. Facebook has the highest purchasing rate compared to alternatives on average 12% higher than video networks, and nearly 50% higher than banner networks. Cost per purchaser The cost to acquire a user who makes a purchase is a critical ROI metric. Since it is directly comparable across a wide variety of business models, cost per purchaser is used in this study to reflect business value to the app marketer. Facebook had the lowest cost per purchaser, acquiring users at a cost 8% less than video networks and nearly 20% lower than banner networks. The key question for app marketers is whether users generated through advertising are monetizing. It is here that Facebook clearly excels. 4 App marketers have a variety of different methods of monetization. For example some monetize through in-app purchases, some may have subscription models, ecommerce and other models. The valuation methods of these different models vary between apps and are not all directly comparable. Long term value (LTV) metrics were considered but can be difficult to compare across categories and business models. LTV may be $ $2.00 on some apps, while others can range into the thousands of dollars. Marketers also use different methods to measure value. Cost per Purchaser best normalizes value across the diversity of business models. 8 fiksu.com/ebooks

9 Labs Report Purchasing rate and cost per purchaser Purchase Rate Cost per Purchaser 100% 100% 133% 88% 149% 81% 50% 70% 90% 110% 130% 150% 170% 50% 60% 70% 80% 90% 100% 110% Banner Video Facebook Banner Video Facebook Example comparing purchasing rates and cost per purchaser across media types Media Source Purchasing Users Delivered Cost per Purchaser Delivered Banner networks 100 $10.00 Video networks 133 $8.80 Facebook 149 $8.10 In this example, for a given budget that delivered 100 purchasing users on a banner ad network, a video network delivers 133 purchasers while Facebook delivers 149 purchasers. At the same time, the cost to acquire those purchasing users is lowest on Facebook. All other factors being equal, if it costs $10 to acquire a purchasing user on a banner network, on average it costs $8.80 on a video network and only $8.10 on Facebook. 9

10 Optimization technology and impact on comparability of results Fiksu applies advanced optimization and automated campaign management tools in its marketing efforts and has developed an extensive range of tools to enable programmatic management of all key campaign management, budgeting and optimization processes. These tools and processes can yield performance improvements up to 60%. Results using standard or manual methods may therefore be different from those shown here. See below for more information on Fiksu s programmatic campaign management and optimization technologies. From the standpoint of pure cost for media, banner and video networks are less expensive, but when looking to the metrics that drive monetization, Facebook is clearly the lowest cost, most efficient source. Fiksu programmatic buying and optimization tools for Facebook Programmatic campaign management and optimization can drive significant efficiencies and ROI improvements on any platform. Facebook s rich demographic and interest targeting options, plus the ability to manage campaigns in real time, provide unique opportunities for driving superior results with programmatic tools. Fiksu has developed an extensive range of tools to enable programmatic management of all key processes measurement, campaign setup, bidding, budgeting, audience management and optimization all working in concert with one another. While any one of these tools can improve results, systematic use of the full suite takes maximum advantage of Facebook s segmentation and audience management capabilities. Fiksu clients who have employed this strategy have: reduced mobile app ad costs up to 60% increased volume by 2X or more while maintaining costs within target ranges 10 fiksu.com/ebooks

11 Labs Report These tools include: Programmatic microtargeting Campaigns that reach granular, precise audiences perform better. Fiksu campaign management tools generate thousands of granular audiences to reach the most valuable users. Mobile measurement: Fiksu s lightweight, mobile-first SDK tracks conversions and links audience segment data to monetization and LTV events. Fiksu s optimization and measurement systems are integrated, enabling immediate response to changing market conditions. LTV optimization: Fiksu optimization algorithms, tuned from years of mobile-only experience, identify high value audiences and make optimal targeting decisions. Programmatic budgeting and bidding: It is not enough to identify the best audiences media needs to be bought at a price that makes sense for each segment. Fiksu programmatic optimizers automatically manage budgets to spend on the highest value audiences. Compared to static management, these tools can generate cost efficiencies over 20%. User segmentation tools: Facebook lookalike audiences take a known segment of users, such as high value purchasers, and find new users with a similar profile. They are a valuable tool for expanding volume and reaching high quality users. Fiksu provides automated tools to create user segments based on purchase and engagement behavior, factors proven to drive performance with lookalike audiences. Automated creative testing and management: Automates the time-intensive process of updating, managing and testing creative performance. Optimizing creatives can influence CPI by as much as 40%. Interest exploration tools: Identifies user interests that are correlated to uncover additional audiences that are likely to convert, enabling marketers to expand their market and find additional volume. 11

12 Summary Fiksu clients have great success with Facebook mobile app ads. Analyzing the data, it s clear why. Labs Report Facebook offers the best value when it comes to generating high value users that monetize. While actual results may vary depending on the type of app, when looking at a broad cross section of apps: Facebook delivers nearly 50% more users who purchase versus banner networks and 12% more than video networks. Facebook delivers those purchasing users at a cost that is 20% less than banner networks and 8% lower than video networks. In addition, Facebook s reach of over 1 billion mobile users covers more than half the addressable global mobile audience. Combine this vast reach with the ability to finely segment audiences, and it s easy to see why Facebook has become a leading choice for brands and games to promote their apps. Marketing apps on Facebook provides abundant opportunities for growth. Getting the results outlined in this study and maintaining long-term performance requires infrastructure that can manage thousands of discrete campaigns, maintain a high quality of user experience through frequent updating of creatives, and provide continuous optimization of campaigns. If you are interested in scaling your Facebook campaigns and achieving the best possible results, consider leveraging Fiksu s programmatic approach to app marketing on Facebook. If you are managing Facebook campaigns today, Fiksu s programmatic approach can find additional volume and lower the cost of acquiring new users. Learn More on How to Achieve Best Performance with Mobile App Ads on Facebook To learn about specific techniques to generate high performance on Facebook, see Fiksu s ebook: User Acquisition for Mobile Games on Facebook:, How to go from good to great marketing your game NEXT LEVEL FACEBOOK APP MARKETING While this report specifically references games, it outlines in detail techniques and technologies that any app marketer can utilize to generate high performance on Facebook. US Fiksu, Inc. 31 St. James Ave. Suite 1150 Boston, MA Phone: APAC Fiksu, Inc. 61 Robinson Road #13-01 Robinson Centre Singapore Phone: EMEA Fiksu, Inc. First Floor 130 City Road London, EC1V2NW Phone: Copyright 2014 Fiksu. All rights reserved. Fiksu, the Fiksu logo, and FreeMyApps are registered trademarks of Fiksu, Inc. All other trademarks mentioned herein are the property of their respective holders.

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