6 Ways To Use Advertising To Improve App Acquisition And Monetization On Facebook

By Guest Writer 

Mitchell Weisman is CEO at global marketing and digital advertising company LifeStreet Media. He will be appearing on the Monetizing Facebook Games Through Advertising panel Thursday at 9:15 a.m. PT at the AllFacebook Marketing Conference in San Francisco.

There are more than 9 million applications and websites integrated with Facebook. Here are six tips to help you stand out and make more from your Facebook app with advertising.

  • Acquire customers by all means possible — and profitable: Gone are the days when developers can expect their apps to become hits from viral distribution and cross-promotion alone. Given the myriad of options competing for customer attention, developers who have revenue streams need to attract users through all available customer-acquisition channels — from public relations, to paid search, to the Facebook marketplace, to in-app advertising (provided by companies like LifeStreet Media). Try everything reasonable at least once to see which channels work best for your specific business needs. Just be sure to track user-acquisition costs and values by channel so you know where to focus your energies and budget. And remember: Don’t average your user costs or lifetime user values, or you’ll end up overpaying for low-value customers and underbidding for high value customers.
  • Focus on critical mass — and the right customers: Having a critical mass of daily average users and monthly average users is important for many reasons. First, it’ll help bump you to the top of the charts, which, in turn, helps build buzz and virality. Additionally, having a large-scale audience tends to help with advertising-inventory monetization. That said, remember that not all customers are created equal. When acquiring customers, think about which customers may be most attractive to potential advertisers, thus lifting your expected cost per thousand impressions.
  • Think beyond the click (or even install): It’s convenient to think about users in terms of clicks or even installs, but the reality is that you need to think about what truly matters to your business — and pay for customers accordingly. The fact that click rates don’t necessarily correlate with customer conversions is common knowledge in the advertising industry. What’s less well known is that app installs don’t always correlate strongly with actual revenue, nor with app usage. Here’s the point: Think deliberately about the actual goals you’re trying to achieve, and pay for new customers in accordance with these actual goals. Are you launching a new product and, thus, need to get to the top of the charts? Pay on a per-install basis. Are you trying to get active, ongoing users, or trying to get users who make in-app purchases? Then pay and optimize for a post-install event that is more strongly correlated to that specific goal — maybe pay on a per-tutorial-completion basis or on a per-game-level-achievement basis (e.g., per second-round game-player). The reality is that the definition of successful customer acquisition varies by business, and it makes sense to tie your acquisition efforts to your specific business needs.
  • Get revenue from both advertising and virtual currency: It’s Not An Either/Or Decision! Too many app developers get caught up in the decision of whether to use advertising or virtual currency to monetize their free apps. Stop fretting about which is better. This is not an either/or decision. Try both. Implementing advertising within your app can be self-serve and almost instantaneous. The risk is incredibly low to try it out and see if it works for you.
  • Many user cohorts can be profitable — if you pay the right price: When buying advertising to acquire customers, too many developers get caught up in trying to focus on how to buy “the high-value users.” Here’s a hint: If you can acquire a group of $ lifetime revenue customers for a $3 CPA, or you can acquire a group of $3 lifetime revenue customers for $1, then both customer groups are profitable, so acquire both groups.
  • Think critically about ad placements and ad types: Don’t assess the viability of advertising based on trying one type of ad placement in one location on your interface. That’s a sample set of one, which never makes sense. Take the time to think critically about logical locations, sizes, and time slots for ad placements. If you develop a multilevel game, consider placing ads during natural transition times — for example, between levels. Similarly, experiment with different ad-placement locations and sizes. Try ads in the top of your app, bottom, and side, and try them in different sizes and formats. Think about the design and user experience of your app to determine where ads will be best received from a user experience, and test out results from your various placements. Taking the time to think critically about ad placements and ad types will both create a better experience for your customers and increased revenue for you.

Forrester Research expects social media spend to reach $4.2 billion by 2015. There’s never been a better time to be a Facebook app developer. Follow these tips to help you make the most of it.