Q&A: Fiksu CEO Micah Adler on How Acquiring iOS Users Has Changed After Offer Walls

One of the more notable beneficiaries of Apple’s crackdown this spring on paying for downloads through offer walls has been Boston’s Fiksu, a Charles River Ventures-backed company that helps developers optimize their user acquisition campaigns.

The company mediates between 20 mobile advertising networks, incentivized install companies and other methods of getting users for developers so they don’t have to stress about finding the cheapest way to bring users in the door. Fiksu’s system switches between networks in real-time, finding the optimal spend on each to gain loyal users. And by ‘loyal,’ we mean that the developer can define an event that’s useful to them like opening the app three times.

Like many companies that end up becoming ad networks or service providers in the industry, Fiksu started out building its own apps under the name Fluent Mobile. But Adler, a former computer science professor, found while struggling to market the company’s apps, there was an even bigger opportunity to solve that same issue for scores of developers.

“We were building our own news reader and we had a very positive launch [in July 2009],” Adler said. “It was app of the week. It was written about in the New York Times. We were seeing 50,000 downloads a day, but things dried out very quickly.”

That’s when the company started to tinker with ways of cheaply getting users to download its apps. They started with paying $3 a download, and whittled that down to about 26 cents. Since then, the company’s picked up some well-known brands like Groupon and Gilt Groupe, not to mention an increasing number of game developers who have had to cut their dependence on incentivized downloads cold turkey.

We talked to Adler about how the landscape has changed since Apple forced to developers to stop getting downloads through offer walls. Up until this spring, it was a widespread practice for developers to give users virtual currency if they downloaded apps from an offer wall. Other developers would pay for these downloads through networks like Tapjoy, Flurry and W3i, which operated these offer walls. (For more depth on this issue, we covered it here and here extensively.)

Q: How has user acquisition changed in the last three months since Apple cracked down on incentivized installs?

A: We’re seeing people are going beyond the download. They’re not paying attention to how many downloads they’re getting. They’re paying attention to how many loyal app users they’re getting. They want people that actually stick around and purchase things or register for services.

Q: Are there any new emerging metrics that many developers are starting to care about? 

A: This dovetails with the indices we’re launching today. One of them is a cost-per-loyal-user index. And we’re defining that as a person who launches the app at least three times. What we’ve found over a large number of campaigns is that there’s a point in the curve where users become more likely to stick around. In our system, developers can define what a successful event is for them and we can actually feed that data that back into bidding algorithm. Maybe it’s a certain number of check-ins or a purchase — whatever it is you want it to be — once it’s defined, we can hook it back into our system.

Q: Who’s benefiting the most from Apple’s policy change? 

A: As you’d expect, there’s been a huge shift from spending on incentivized traffic to spending on traditional banner ads. It’s almost not a choice. It’s more that developers are being forced to do this because there isn’t the same amount of inventory for incentivized downloads because of Apple’s policies.

The whole marketing problem for developers has actually become harder. Before, many developers were able to get to ROI-positive in their spend purely on these incentivized downloads. And once you get to that point, it’s easy to spend a lot.

These non-incentivized sources are harder to work with and there are new ones popping up all of the time. That puts us into a very interesting situation. People were happy with the results they were getting before. But now things are more challenging.

Q: Any particular entities that are benefiting the most? Apple’s iAd? Google AdMob? 

A: It’s a pretty broad range. Basically anyone that’s able to deliver cost effective downloads. InMobi, Millennial too. Because of complexity of banner ad ecosystem, I would describe us as one of the bigger beneficiaries.

Q: How much has the cost per download changed since Apple’s change?

A: There are two things to look at. There’s the direct cost per download. In the heyday of the incentivized world, you could get downloads for 35 cents or even 25 cents. It was a very cost effective way of getting downloads.

Without that kind of inventory, the cost of a download has increased very significantly. We see a broad range of costs-per-download. It’s impossible to get anything less than 50 cents for some apps. For others, it’s difficult to get downloads for less than $2.

The second piece you need to look at is this cost-per-loyal-user metric. And that has gone up too since Apple’s ban. But it hasn’t gone up nearly as much as cost-per-download.

The cost per loyal user in April was 94 cents. For June, it was $1.27. That’s nowhere near how much the cost per download increased.

Q: Why is that the case?

A: Part of it is because of the targeting you’re getting when you pay for an incentivized download. The propensity of an incentivized download user to turn into a loyal user is smaller than someone who clicks on a banner ad to download the app.

Q: What advice would you give to a mobile developer that’s launching a fresh app today?

A: The biggest piece of advice is track everything deeply. Also, the more ad networks you can bring into your campaign, the more cost effective it’s going to be. If you put all of your dollars into one ad network, you’re not buying the most cost-effective traffic.

Q: How does user acquisition look like on Android?

A: Climbing the ranks within Android Market is different than climbing the ranks in app store [because Android Market doesn’t rank apps purely on their downloads rates]. That said, you can subsist successfully with the exactly the right amount of advertising.

Android today is like the Wild West compared to iOS. We’re actually seeing a tremendous amount of cost effective traffic on the platform. There are cheaper clicks and higher quality traffic at a lower price. I think that’s because it’s still early days. Right now is a great time to get into Android. You need to get in early while things are still unsettled.

 Q: Right, but many of the companies that were doing incentivized downloads moved over to Android —

Incentivized downloads have much less of an impact on rank in Android Market. These companies aren’t quite as effective there. That doesn’t mean people shouldn’t work with them. It’s just the math is different in that market.