When retargeting means additional app revenue: A guide

Marketers working within the mobile ad industry know how fierce the competition for user acquisition can be in the app promotion space. It’s expensive to acquire new users and many times the cost per install or cost per action that advertisers get in their campaigns is higher than the goal itself.

Under these conditions, it’s no surprise to see marketers dedicate a lot of time and effort to user acquisition: they do a lot of testing with different creatives, different traffic sources, and different targetings in order to optimise results and get closer to their KPI objectives.

Retention – the ‘unattended’ challenge

However, the hard work is not complete when advertisers are able to generate new installs or even in app events under the pricing goal: they still need to deal with the very high app abandonment rates that exist in the market. App engagement rates are often really low, which makes sense in a market where thousands of new apps are launched every day.

In fact, every user has dozens of apps installed in their devices, so the competition for user interaction is quite strong. Different studies in the market show about 25% of installers only open/interact with the app once before they uninstall it. And push notifications are often ineffective as users tend to ignore them.

So, not only is acquiring new users difficult: retaining them is a big challenge as well. Nevertheless, too often we see marketers focusing their efforts on optimising user acquisition campaigns rather than on retention. This can sometimes be a problem: spending time and money getting new customers to download an app does not generate much value if they don’t convert or only convert once. The real impact comes from the recurrent users that use the app (and convert) on a regular basis.

Retargeting as the solution

An appropriate and well managed app retargeting campaign can have an significant direct (and positive) impact on the advertiser’s bottom line. If they can get their users to use the app more often, spend more time on it, complete actions and repeatedly interact with it, they will be able to generate more revenue. Conversion rates will improve and so will the lifetime value and ROI.

There are many options when it comes to retargeting users. Marketers need to consider the specific conditions of their business to decide what makes sense to test.

Let’s see a few examples of criteria that may make sense for some businesses:

  • Actions performed by the user: It’s important to measure not only the revenue generating events inside the app, but also some intermediary ones in the funnel. This way advertisers can segment groups of users based on the actions performed or not performed and establish communications aimed at bringing them closer to completion of the funnel
     
  • Number of times a user has used an app: it is often a good idea to divide the targeting in groups of users according to their maturity with the app. For example, a product discount might work better for a user that has only opened the app a couple of times, while an ad for a complementary product can be suitable for mature users that have already purchased other products
     
  • User location: Many times, the location of the user can provide valuable information to achieve better results. Advertisers can use it to show ads to users that are physically close to a store, or to promote a product with high stock on certain regions, or to people that based on their location are likely to be interested in something (travellers at the airports, for example)

These are just a few cases that marketers can consider when deciding on the best segments to re-target. However, they should test different retargeting criteria in order to find what works better for their particular circumstance.

It is worth highlighting that many advertisers underestimate the importance of retargeting active users. Sometimes this fact leads them to lose the opportunity to significantly improve their results. There are many successful cases where a brand registers a relevant rise in revenue by re-targeting their most engaged users. Showing them an ad can bring them to the app and generate value to the advertiser that would not have been generated otherwise.

What is critical to understand is whether your retargeting campaigns are being successful, as opposed to just throwing money to users that would have been as engaged anyway, in measuring the outcome of all your campaigns incremental metrics can be of great help here.

The importance of incremental analysis

Following the incrementality approach is the right option to not only find what acquisition campaigns are generating most value but also what retargeting strategies are being most successful. You need to establish the cause-effect relationship between your retargeting campaign and your results.

You may get great results among the users targeted by your campaign, (through a lot of purchases after the campaign, for example), but are those purchases a result of your campaign or would they have taken place even without it?  Incremental Metrics will tell you. Advertisers can calculate them by dividing each retargeting segment into two groups: one that is left out of the retargeting campaign, and another that sees the ads. Then, they compare how much revenue was generated by both groups and see how much more (or less) was generated by the users exposed to the campaign.

After calculating the incremental revenue and the incremental number of conversions, the next step is to calculate the cost per incremental conversion – if that KPI is below the goal, the campaign was a success. If not, the marketer should try a different strategy. Either way, this optimisation process should be an ongoing effort: even when results are positive they should be challenged by new test ideas. The best DSP solutions do this automatically in every campaign with the click of a button, but an advertiser can also do it without a specific incrementality tracking tool, simply by following the above methodology.

Conclusion

The app advertising market is very competitive, and advertisers must apply great effort to acquire new users at reasonable costs. But there is another problem: app abandonment rate. The number of available apps fighting for user’s attention is huge, which makes it really hard for a brand to generate loyal customers.

Many advertisers lose revenue opportunities by focusing too much on the first problem. Retargeting campaigns are definitely a strategy that can help to register a higher number of active users, and can contribute significantly to higher profits. Ultimately, incremental metrics are essential to help marketers find the best segments and the best messages to maximise the opportunity retargeting represents.

Interested in hearing leading global brands discuss subjects like this in person?

Find out more about Digital Marketing World Forum (#DMWF) Europe, London, North America, and Singapore.  

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