The Future of Mobile User Acquisition and Monetization

[Originally posted on Gamasutra November 6th 2013]

The iOS and Android app ecosystems will grow more crowded and competitive than ever in 2014, and developers need to keep an eye on upcoming trends for user acquisition, monetization and user retention if they want to stay afloat. After a year of reviewing industry conferences, panels, workshops, and fireside chats, with the most recent being GMIC, here are four key takeaways about the trends and best practices from 2013 that will support mobile developers into 2014 and beyond.

CPE, not CPI, is the future of user acquisition.

There is a lot of debate in the mobile app ecosystem about the benefits of cost-per-engagement (CPE) versus cost-per-install (CPI) pricing models. But attendees throughout mobile and gaming conferences this year were eager to know: which pricing model is better at acquiring users?

The answer: CPE. It’s more than just a method—it’s the future.

At NativeX, we found this out for ourselves when we tested how well a role-playing game on Google Play held onto new users when it was advertised through both models using our reward/incentive ad network. For context, we ran the test during the week when that game was featured on Google Play and gathered user retention data for that placement as well. At the end of that week, the app’s seven-day retention rate for users acquired through a reward-based CPI was 12.7 percent, while the rate from a reward CPE system was 19.2 percent. Surprisingly, the CPE pricing model also beat out users acquired through Google Play – only 15.8 percent of users who downloaded the app directly from the featured placement on the Play store stuck around for longer than a week.

New developers must encourage users to spend in-app currency sooner, not later.

It’s now well-established that freemium apps will continue to gain market share over paid alternatives in the coming year, so developers in all market sectors will need new ways of making a profit without charging download fees. During the GMIC “User Acquisition and Monetization 2.0” panel, Paltalk president and former OMGPOP executive Wilson Kriegel pointed out that new developers shouldn’t worry too much about monetization without first focusing on high user engagement and retention. His point is insightful – users won’t put up with irritating ads or spend real money until an app becomes a valuable part of their lives.

However, there are engaging, unobtrusive things developers can do very early on in their user retention cycles to clear the way for monetization as quickly as possible. One is getting their users to start using in-app currency as soon as possible. They will have to offer it to users for free in the beginning, of course, but the sooner users recognize the virtual currency’s value to their gameplay experience, the sooner they’ll be willing to buy more. This strategy works especially well for games because spending in-game currency is often a vital part of the game’s functionality.

Ad network mediation is promising, but not without fault.

Ad network mediation, in which developers use a mediation service to pick and choose ads from across multiple ad networks, has been touted as the way of the future for effective monetization. At GMIC, Wilson Kriegel argued that greater choice of ad networks gives developers access to more effective ads overall.

I agree that the mediation system shows promise, but while it’s certainly better than standard ad network integration, it’s not disruptively better.

Several years ago, we incorporated ad mediation into our platform at NativeX. We saw a slight increase in profitability for the partner developers who used that technology, but not a large enough increase to be significant or worth the effort. The eCPM figures we’ve seen from leading in-app ad publishers say the same thing.

The reason is that right now, typical ad networks all source their campaigns from the same pool of advertisers and campaigns. And since most of those ads use the same cut-and-paste formats, mediation doesn’t provide much more choice and flexibility than your average individual network. If the available ads are all distracting or forgettable, they’ll all see the same bad results.

For now, it makes for more sense to focus on developing ads that use innovative formatting to mesh seamlessly with apps and add value to the user experience. Once networks are able to provide diverse formats on a broader scale that are very persuasive, mediation will become more valuable.

For foreign markets, there’s no cookie cutter recipe for success.

Mobile ad solutions should be as diverse as the customers who use them. Different countries, and different market segments within those countries, will need individualized approaches in order to guarantee success. At the Monetization panel, ZQGame Inc. CEO Michael Zhang explained that developers hoping to expand into thriving mobile markets in Asia need to understand local use cases and key demographic profiles instead of relying on their previous experiences in the US.

In-app monetization provides one of many examples of these regional differences. In Japan, for example, in-app monetization is much more common than in America – partially because of the popularity of strategy and role-playing games, which lend themselves well to in-game purchases. For game developers hoping to expand in Japan, focusing monetization efforts on in-app advertising would be an inefficient and counterproductive strategy.

Football Wisdom for the Business World

[Originally posted on BuzzFeed October 4th 2013]

At NativeX, my colleagues and I are always looking for fresh perspectives on the mobile advertising business. Sometimes these perspectives come from unexpected places. As a lifelong Vikings fan, I wasn’t sure how much wisdom I’d find in “The Score Takes Care of Itself,” the leadership manifesto by legendary San Francisco 49ers coach Bill Walsh. But the more I read, the more I similarities I saw between Walsh’s strategies and the strategies we’ve used to put NativeX at the forefront of innovation in native advertising.

Below are five winning business strategies based on tenets of Walsh’s philosophy.

“To Succeed, You Must Fail”

Innovation takes iteration. Most great businesses start with a great idea, but Walsh knew that even the best ideas need development and fine-tuning. Prepare to try out many different variants of an idea before finding a way to make it work. At NativeX, we never would have gotten into native advertising if we didn’t see for ourselves how standard banner ads flat-out don’t work.

“Be Obsessive in Looking For the Upside in the Downside“

Walsh’s famous West coast offense was born when he realized that though Cincinnati quarterback Virgil Carter couldn’t throw the ball deep like prototypical NFL quarterbacks, he could throw very accurately over short distances. Likewise, in business, supposed shortcomings can actually be clues about ways for you to set yourself apart from your competitors. This realization is often the outcome of the iteration and fine-tuning I mentioned in the first point.

“Control What You Can Control”

Walsh says 80 percent of football can be controlled. The other 20 percent comes down to referees’ decisions, bad bounces and so on. This is true in business as well, where politics, employees’ personal lives and even the weather can affect your business and your industry in ways you can’t predict or control. It’s important to think carefully about what aspects of your environment you actually exert influence over and focus your attention on them.

For the things you can’t control, recognize that you can at least make plans to keep yourself from getting caught flat-footed when they happen.

“Identify Problems that Need to be Solved, and Be Able to Solve Them”

Walsh recognized players that were negative influences on his team and took steps to remove them. Along the same lines, businesspeople need to be on the lookout for parts of their strategies or teams that aren’t working.

A big part of this is making sure you don’t fall into situations where you’re unable to make a necessary change even though you know it has to happen. This requires good planning and a lot of efficiency. At NativeX, even though we saw that native ad formats were yielding much higher results, most mobile ad networks didn’t allow for publisher based customization. It’s taken a lot of legwork and careful planning to get to a position where we’re able to build the ads we want to build without having to cave in to market pressure.

“Applied Intelligence”

Walsh was constantly looking for ways to get a different perspective on his situation and outsmart physically dominant competitors. Along the same lines, in business, it’s important to keep looking for fresh perspectives that might show you opportunities other, bigger competitors are missing.

At NativeX, we put a lot of focus on ad mediation, but even after integrating with multiple ad networks, the ads weren’t working very well. When we finally surveyed the market, we found that other app developers using ad mediation were getting the same bad results. When we actually analyzed the overall picture, we saw that every ad network was running essentially the same types of ad campaigns. This allowed us to see ways for us set ourselves apart, like format innovation and targeted programmatic technology.

NativeX Launches New Video Ad Format

Sponsored Post

Introducing a new Mini Multi-Offer ad format “Triad.” Triad combines the latest mobile video ad technology with NativeX’s industry leading selection of native advertising formats to give users the choice of which ads to engage with. Triad joins the NativeX Discovery Suite to give developers the right ad format to optimize strategic placements in their apps for a more native experience with higher impact.

Read the Full Post Here.

See Video:

Is Google Killing Off Mobile Spam?

[Originally posted on Forbes September 16th 2013]

Google Play Developer Program Policies will be seeing some significant changes this week on September 20, 2013. Rob Weber, co-founder of NativeX, weighs in on a potential $150 million in ad revenue at stake and the impact on the Android market.

“In late August Google GOOG +0.02% announced that they would be changing their developer policies… It’s a bold, big move to catch up to iOS. The ad market has kind of been a grey area on Android,” says Weber. “Some ad networks have become very spammy because Google hasn’t been very stringent to this point. It was pretty much anything goes. This is a jump to improve the user experience and an attempt to catch up to Apple.”

The key aspects of these changes are designed to crack down on all manner of “spammy” ad networks, push notifications, and ads in the notification bar space. This will impact thousands of developers and could cause serious damage to companies reliant on these practices.

Read more at: http://www.forbes.com/sites/danieltack/2013/09/16/is-google-killing-150-million-in-ad-revenue/

You’re gonna need a smaller bloat

[Originally posted on PocketGamer.biz August 24th 2013]

Software Development Kits have become something of a Frankenstein’s Monster in the mobile development community.

They were created as a means to enhance our apps but are actually becoming a huge problem.

If you need to add anything from analytics to an offer wall, there’s probably an SDK for that.

By just adding some code, there’s plenty of ways to optimize your app. However, at what cost do these SDKs come?

When SDKs begin to bloat your app it can increase the chances of bugs and crashes, drain your engineering resources, and hurts the user experience in your app.

Something for everything

This is just how bad the SDK bloat issue has gotten. There’s an SDK for analytics, an SDK for A/B testing, an SDK for display ads, and a direct deal ad network and/or mediation provider.

Then you have an SDK for a video ad network. Then an SDK for an offer wall provider. Once the app is making money, developers can put another SDK in to help provide user acquisition insights.

SDK bloating has become such an issue that some apps actually have more lines of code for the SDKs than for the actual core content of the game.

One of the biggest problems that comes along with SDK bloat is the time and resources it takes to integrate and maintain them. The more SDKs that go into the app, the more that engineering resources you have to be set aside for keeping them up-to-date.

For developer operations of any size, engineering resources are a precious thing and every minute spent away from creating awesome content hurts the business.

Beyond lost time, multiple SDKs bring about an increased potential for bugs.

As any developer knows, coding can be a tricky mistress. By adding additional lines of code, you increase the risk for things to go wrong – ending in bugs and potentially crashes. When you also consider that the code isn’t coming from your team, you can’t be sure how it will get along with your content. This is multiplied when you also have different SDKs interacting with each other inside your game.

Heavy load

This whole issue reminds me of my own personal addiction with buying gadgets.

I started off with a PC laptop. Then I bought a Galaxy Nexus phone. Next came the iPad 1, 2, and 3. After that I picked up the Kindle Fire and Nexus 7. Of course I had to see what the iPad Mini was all about.

Then wearable gadgets came along so I grabbed a Garmin watch and FitBit. But then the iPhone 5 came out so I made the switch over to iOS. After everything, what I ended up with is a bloated briefcase that nearly burst at the seams with over a dozen gadgets.

Guess how many I actually use in a day? Two. A single laptop and my iPhone. All the rest rarely come out of the bag.

Action points

So what can developers do?

Start by finding a one-stop-shop SDK, like NativeX, that provides a competitive feature set encompassing 90 percent of your needs. Ideally, that one SDK should be able to do rich media, video, interstitials, offer walls, and also act as a mediation layer with other ad networks.

From there, developers need to ask themselves how much value they’re really getting from each third-party SDK and add sparingly.

I finally made the decision to un-bloat the briefcase and only carry the two gadgets that do a majority of what I actually need. Developers need to make a similar choice and slim down to only the SDKs that offer what they need with the least amount of bloat.

Recurring Theme at MobileBeat 2013: Ads That Don’t Suck

[Originally posted on VentureBeat July 23rd 2013]

Now that the dust has settled and another MobileBeat has come and gone, we’re left wondering what the big lessons from the show were. Having experienced MobileBeat in the past as a sponsor, speaker, and attendee, there was one big trend I saw popping up at a lot of the panels and talks this year for the first time: the rise of native advertising and sponsored content.

Chances are you’ve probably read a sponsored post on the web and actually enjoyed it. Publishers have embraced sponsored content because it delivers superior value for the advertiser and consumer. Consumers are actually clicking and sharing, which means more money for the publisher.

It’s become so effective and popular that, along with entire blog and news sites dedicated to sponsored content (such as Zemanta), companies are finding creative ways to insert their brand in innocuous places (Solve Media just landed $6 million in funding to sponsor CAPTCHAs!).

Read more at: http://venturebeat.com/2013/07/22/native-advertising-was-the-sleeping-giant-at-mobilebeat-2013/

Pursue the Lemonade Stand

[Originally posted on The Wall Street Journal June 13th 2013]

I’ve had the unique experience of being an entrepreneur for the majority of my life, even before co-founding NativeX. I launched my first e-marketing site with my brothers when I was 16 and never looked back. A lot of the wisdom that helped get me where I am today came from my father and stepfather—both of whom have entrepreneurial backgrounds in some regard. As such, I’m honored to pass on some of those same lessons to my own kids.

Entrepreneurship is a viable career path. One of the first lessons in becoming a successful entrepreneur is recognizing that it’s actually possible. I’m shocked by the amount of talented and driven people going through life without considering entrepreneurship as a viable option. Uncertainty, fear, and high rates of failure end the journey for many before it’s even started.

In Minnesota, for instance, we’re lucky to have a wide array of Fortune 500 companies like 3M Co., General Mills Inc., and Target Corp. Most young people here are force-fed the notion that success means doing well in school before getting a job at one of these giants. My kids, on the other hand, will have lemonade stands as soon as they’re strong enough to squeeze the lemons. I will drive home the point that there are opportunities out there besides working for someone else. To accept this, there are a few more lessons they need to understand.

Embrace failure and fail upwards. My father’s greatest hobby is nature photography, but it was always unclear how he would convert that content into a business. He tried creating a website for his photos, but it soon ran aground; he was more into art for the sake of art. Yet having tested the waters of website-building for his photography, my father was then able to successfully build out a business using his professional skills as a safety engineer. A popular “safety blog” is now one of his primary sources of income. Similarly, my brother and I have had our share of failed initiatives pivot, over time, into successful businesses.

Anticipate potholes before you run them over. Growing up, my stepfather was another entrepreneurial influence in our household. He was a software developer, but early in his career ran an automotive repair business. He was often telling us about potentially critical things that could have put us out of business. I didn’t even think about paying my taxes when I was a teenage entrepreneur until my step-dad brought it up.

Provide encouragement. Once you know what to do, focus! Work toward being the best at that, and accept that you can’t do it all. You’ll need the help of a team or partners for the other challenges that might take up your time.

Additionally, entrepreneurs-in-training should be open to new ideas and fields of thought. As a kid, I wanted to grow up to become a computer scientist. Though that didn’t pan out, the heavy encouragement I received around math, science and technology wasn’t lost on me. That education shaped my thinking, allowing me to identify opportunities overlooked by others. To that end, I’m encouraging my kids to develop these logical skills. My seven-year old daughter loves dance and will be going to dance camp this summer, but I also have her signed up for a Web-development camp.

‘Podbuster’ Ads, Calculated To Make You Hit Pause

[Originally posted by Neda Ulaby on NPR January 12th,  2011]

Call it smart advertising — or bad boundaries. You may have noticed a spike in the number of TV commercials designed to look and feel like whatever show you’re watching. They’re called podbusters, DVR busters or interstitial ads, and they’re designed to remove viewers’ fingers from the fast-forward button during blocks — or “pods” — of ads.

The advent of TiVo and similar devices can be thanked for the rise of the podbusters. About 40 percent of households have DVRs — meaning 40 percent of households can easily zip past commercials. Think of podbusters as speed bumps for ads.

Media consultant Dan Portnoy got caught while watching one of his favorite shows — the AMC drama Mad Men. That evening, he was speeding through the commercials as usual when he saw guys in ’60s fashions in a familiar-looking office, and he thought the program had started again. So he stopped fast-forwarding. What he saw looked like Mad Men. It sounded like Mad Men. But it was an ad for shampoo.

Read more at: http://www.npr.org/2011/01/12/132838343/podbuster-ads-calculated-to-make-you-hit-pause

History of PPC with GoTo.com

[Originally posted by John Rampton on PPC.org November 20th,  2011]

So as it turns out, we get the question quite a bit about something that you may get surprised with.  That would be: “Where did PPC really start?”  Well, when I thought about it, I didn’t actually know for sure the best answer to that question, only a few points.  So we dug in the history books and came up with the History of PPC with GoTo.com, and how everything went from there on out, to evolve to the PPC world we now know.

Before getting started on the timeline, we better make sure we are all on the same page as far as what PPC actually is!  PPC or Search Engine Marketing is basically a process of gaining traffic by purchasing ads on search engines. Basically, the three biggest network operators now are Google Adwords, Yahoo Search Marketing, and Microsoft Ad Center.  Obviously, Google owns much of the market.  With that established, let’s explore how this all came about!

-1997: GoTo.com launches. GoTo.com was founded by ideaslabs.

Basically, GoTo.com was an Idealab Spin Off, and was the first kid on the block to provide Pay-for-Placement Search Service.

Read more at: http://ppc.org/history-of-ppc-with-goto-com/

How AirBnB Became a Billion Dollar Company

[Originally posted by Dave Gooden on davegooden.com May 31st,  2011]

Disclosure 1: I work in the vacation rental industry. While my company specializes in regional, recreational vacation homes, not metro rentals – there is an obvious conflict.

Disclosure 2: This is an opinion piece. This post is just my opinion along with some evidence to support it. Judge for yourself.

Yesterday AirBnB announced that they raised $100M at a $1B valuation. This is a huge, huge accomplishment – but a lot of entrepreneurs are probably asking how they did it. Was it their awesome design? Excellent idea? Was it their uncanny business acumen? Just dumb luck?

My Answer: Craigslist Spam!

I believe AirBnB used multiple gmail accounts to spam craigslist and grow their site to a one billion dollar valuation.

Read more at: http://davegooden.com/2011/05/how-airbnb-became-a-billion-dollar-company/

 

Letting Go of Your Baby: A Founder’s View on Bringing in a New CEO

[Originally posted on Wired.com April 10th 2013]

As both a father and an entrepreneur, I can say with confidence there’s a lot of parallels between raising a kid and starting a company. Both take a lot of time and dedication, you invest a lot of yourself in both, and for both you need to know when to let go of the reins.

Like with a child, you pour your blood, sweat and, tears into making sure it’s the best it can be. However, you need to realize you can’t do everything on your own. Just as when there’s a time you’ll need to drop your kid off at school, there may come a time in a startup when you need to bring in a new CEO to augment the company’s growth and help scale.

In 2007, it was becoming apparent that NativeX could benefit from a new CEO. Since forming in 2000, the company had grown to about 60 people but it was clear that our growth had begun to plateau. The majority of our employees were young guns- most being under 25 years old.

At this time, I had won an arm wrestling contest with my two other founders so I was acting CEO. However, most of the founding team had drifted from the center and were gravitating to other roles such as product engineering and customer relations. It was about that time I recommended to the founding team that we look to bring on a CEO- we hired Andy Johnson to fill the role that year.

Read More…