The idea that all customers are created equal is cute. Too bad that it’s a lie, particularly for mobile app developers. Someone might download an app and use it once but then let it sit with any number of unused apps occupying several screens on their smartphone. That’s especially problematic when developers are paying to acquire those users, and would need to spend even more to account for churn.
To help matters, the social ad tech firm Nanigans says it has created a new way for mobile app developers to run mobile ads on Facebook aimed at the users most likely to use and spend money in their apps over the long run. Nanigans’ Ad Engine platform is able to identify the most lucrative users of a given app, correlate that with the Facebook targeting parameters used to get them to download the app in the first place, and then create new Facebook targeting profiles for the future.
“A lot of companies optimize on higher funnel metrics like cost per click or cost per acquisition, but we’ve built an algorithm looking at the lifetime value or true ROI, actual return on ad spend,” said Nanigans COO Marc Grabowski.
Running ads through Facebook gives Nanigans’ technology an even better platform on which to distill specifically who are a developer’s most valuable lifetime customers because of the social network’s targeting options. “It goes well beyond geography and demographics,” Grabowski explained. “We can look at different interest-level targeting, action spec targeting, what Facebook apps people have taken part in or interacted with and overlay that information with performance behavior to give a level of granularity you can’t get anywhere else.”
Good as that granularity might be, a danger could be targeting mobile campaigns at too fine an audience and sacrifice reach. But Nanigans’ technology estimates the size of an audience and its predicted click-through rates as an advertiser builds its segments, so that the marketer can see whether a campaign is worth running.
For example, the Ad Engine’s cohort analysis can tell an advertiser that on the first day of a campaign it acquired 100 users who spent a total of $10,000 in the app over 14 days and then break those users down into different categories to help the advertiser determine which criteria to go after in future campaigns. If advertisers don't want to get that in the weeds, they can let the Ad Engine automate its ad buying to target those more valuable lifetime users. Either way “it becomes more of an actionable insights platform,” Grabowski said.
Nanigans tested the new lifetime value Facebook mobile ad targeting with just under 20 advertisers, including Fab, TinyCo and Wooga, Grabowski said. One of the advertisers in the pilot had seen a 49 percent return on ad spend within three days of launching a campaign, whereas on other mobile ad networks it took seven days to see that 49 percent return. After seven days using Nanigans’ Ad Engine, the advertiser saw a 78 percent return on spend.
A member of Facebook's top-tier Strategic Preferred Marketing Developer program, Nanigans’ reputation as one of the top social ad firms oriented around direct-response advertising (its primary customers are retail/e-commerce companies and game developers) is helped by its business model. Rather than take a cut of the price an advertiser pays per click or per install, the company runs on a software license fee, meaning that Nanigans wouldn’t benefit from juicing click or install margins. Instead it’s in Nanigans’ interest to convert users more valuable over the long term because it will help advertisers justify paying the license fee rather than a shorter-term cost-per-click or cost-per-acquisition buy, per Grabowski.