Why traditional marketing theories don’t apply to mobile apps

Mobile Economics User Acquisition - KontagentI often wonder why Philip Kotler, the father of modern marketing principles, has never once written about mobile user acquisition. After all, the practice itself isn’t far removed from the traditional “brick and mortar” approach to marketing and acquiring customers. The only difference is it’s being applied to the latest digital age manifestation: mobile devices.

The fundamental user acquisition principles are the same, but since we are dealing with a different market and industry, we are also dealing with a totally new way in which customers find, reach and interact with your mobile apps. Consequentially, while this form of marketing remains a science, it is also undoubtedly a form of art.

As branding legend Walter Landor once said, “[A] brand is a promise. By identifying and authenticating a product or service it delivers a pledge of satisfaction and quality.”

In the case of mobile, your brand should deliver a rich, fun and engaging experience. Why? Because it ensures that those precious users you’ve acquired are retained for as long as possible–ideally to the point that they’ve monetized multiple times and generated positive ROI.

This is a big deal because in the app market place, all the classic rules of modern economics and marketing are being bent. This in turn has changed how user acquisition works in mobile.

The state of mobile economics

Mobile customers are very fickle. The unfortunate truth is that most hold little to no loyalty for even their most cherished of apps. Generally it won’t take more than a bad update or a rival app with better functionality to cause a customer to stop using or uninstall your mobile offering. At the same time, this is also a market whose economics are turned on its head.

Fundamentally, mobile apps are like Giffen goods (last economic term, I promise) one which people consume more as prices rise, even in a tough global economic climate. This is likely because entertainment, like game and gambling apps, are a great form of distraction in times of crisis. Though, I often wonder whether consumers actually realize that they are spending more money now through impulsive microtransactions, than they did when most apps were at a premium.

Regardless, within the app market supply is ever growing, and demand also increases (albeit sometimes inconsistently) as people learn new ways of consuming content.

App downloads are votes

As one of my colleagues once told a major brand, you should treat every app download as a vote. That is a vote of confidence in the promise that your brand represents, through your app’s content and reach. At Kontagent we interpret that vote as actionable data that can be used to drive your content strategy and help you better reach the right customers who consume your brand, regardless of whether it is a game, utility or retail app.

While developers continue dreaming of a world where they can simply develop what they love, like any other product in the world, apps need to be marketed and users must be acquired. Such is the nature of business (and mobile is definitely not a business to be ignored) There’s no point in making apps with unappealing content, even if you have a ton of reach through acquired users. The inverse is also true. Creating a great app that reaches no one is a fruitless endeavor because in both of these cases the result will be an exodus of customers.

As a developer friend of mine once said, user acquisition is a complex and time consuming process, requiring a broad understanding of the mobile landscape, user source value, multiple data points, and the ability to analyze data in real time. The keywords here being complex, process and analyze data: Kontagent’s daily bread and butter.

Understanding healthy user acquisition

There’s a wealth of information available that describe the nature of mobile user acquisition, from the LUMAscapes by Luma Partners to the market maps of MobyAffiliates and countless other articles. While the field is undoubtedly complex, the simple answer is that the mobile landscape is difficult to follow. It’s in a constant state of flux and the only thing that seems certain is that it’s poised to continue to grow.

So how do you start to breakdown and understand user acquisition within such an uncertain environment? The easiest way is by sticking to what something isn’t rather than talking about what it actually is. By this, I mean that app user acquisition isn’t special because it deals with the mobile industry, but in simple terms it’s marketing.

So how do you measure the success of any marketing effort? By tracking the right key performance indicators. Just like how traditional brick and mortar marketing fights with things like gross rating points, target rating points and effective frequency, mobile user acquisition also has KPIs to measure success.

This list could be endless as the debate of what is and isn’t an essential mobile user acquisition KPI has yet to conclude. However, I think the answer is simpler than industry is making it out to be. The key ones to follow are:

  1. App store ranking (per week, sometimes per day is ideal): Your app’s place in Google Play and the App Store is a strong indicator of how well you’re attracting customers now and in the future. Breaking it down further by geography, app category, top grossing and so forth, only adds to your insight.
  2. Effective cost per action/acquisition (eCPA): Your app’s eCPA is important to track because it tells you how consistently you’re getting users to perform certain actions.
  3. Effective cost per mille (eCPM): A “mille” means every thousand impressions. Your app’s eCPM gives you insight into your revenue across channels, which in turn reveals where users are coming in.
  4. Lifetime value (LTV): The lifetime value of a customer is vital to measuring whether they are worth pursuing.

That’s it! Authors have written about all sorts of other aspects like the amount of user reviews, press coverage, the ratio between the available budget versus revenue, icon optimization, keyword optimization and so on.

While these are all valid metrics to explore, they are additional layers added to the core KPIs mentioned above. Therefore, if you’re not tracking these metrics effectively, you are neglecting the ABCs of mobile user acquisition.

Some may argue that ARPDAU, ARPPU, ARPU, and all the other “ARP” KPIs are even more important. While these metrics can certainly help paint a better picture of customer LTV, remember, they’re only one part of understanding the user acquisition equation.

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Filippo De Rose - Kontagent Mobile Channel SalesAbout the author: Filippo De Rose is Kontagent’s mobile channel strategies expert. A trilingual world traveler, Filippo has a passion for technology and dissecting the nuances of monetization, user acquisition and mobile marketing theory. He has a bachelor’s degree in computer science and holds two graduate degrees, including an international MBA. Send him your thoughts at Linkedin.com/kontagentpartnerships.

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