In late June, Facebook made significant changes to its mobile advertising offering by simplifying its Mobile App Install ad workflow. Advertisers can now link their app to Facebook by simply entering a destination URL to their app on Apple's App Store or Google Play, reducing the amount of time spent on deploying new app promotion campaigns.
Clearly, Facebook hopes to take advantage of the current and future growth in mobile advertising. Mobile ad spend is expected to grow to $37 billion by 2016, according to eMarketer.
As marketers continue to test new ways to drive awareness, engagement and sales via mobile devices, Facebook is placing a bet that mobile apps will become a primary part of every marketer's strategy. So far, industry trends suggest Facebook is making a safe bet. The number of unique iOS and Android mobile apps are expected to increase 257 percent by 2017 to 200 billion, according to mobithinking.com.
Many companies that have experimented with Facebook's Mobile App Install ads have found them to be a cost effective way to promote their mobile apps. The click-to-install rate from Facebook's Mobile Install ads is 10 times higher on average than the standard banner ad, according to AdExchanger.
Facebook's Mobile Install ads offer flexible targeting options including demographic, geographic, connections, offline buying behavior, and CRM data.
An advertiser looking to promote a mobile app simply has to select targeting parameters and add an image, text, and link to the download landing page. Using a Facebook advertising management platform, this can be accomplished in under three minutes.
Targeted Facebook users will be served a "suggested" application ad in their newsfeeds. Users who click the "Install Now" link embedded in the ad unit will be taken to either Apple's or Google's app stores, where the actual download occurs. The "Install Now" click will be recorded by Facebook, but the actual download from the app store must be tracked on the client side.
This is a very important point for current and future mobile app advertisers on Facebook. What this means is that advertising apps solely with mobile app install "clicks" (the Facebook metric that is captured when a user clicks "Install Now") doesn't tell the whole picture. Facebook's metric ignores critical data points marketers need to determine the success of their advertising efforts.
While the App Install click metric provided by Facebook does show download intent for an app, it does not show Application Download Rates (ADR), downstream revenue following the download, or Lifetime Value of downloads. These types of offline metrics are essential to make important ad optimization decisions, and should be analyzed in conjunction with the more rudimentary click and engagement metrics provided by Facebook.
To demonstrate the importance of optimizing mobile app install ads based on offline data, let's walk through a simple example.
Let's assume an advertiser has $600 to spend to promote his mobile app on Facebook. He decides to split the budget equally between two segments to test the efficacy of his ad with two distinct audiences.
After running the campaign for two weeks, he pulls the following information from directly from Facebook and begins his post-launch analysis. Looking at the Mobile App Install click data provided by Facebook, it appears Segment 1 is the more appropriate Facebook audience to target, since it drove more install clicks at a lower cost-per-click. Using this data, the marketer would most likely pause or lower bids for Segment 1 and further optimize Segment 2 through creative testing and micro-segmentation.
While optimizing towards app install clicks may be a reasonable short-term goal for your mobile app promotion strategy, in most cases, this strategy falls short in the long run. Facebook marketers who incorporate offline and revenue-based metrics into their mobile app promotion performance data tend to make better optimization decisions and see better long-term ROI.
Continuing on with the above example, let's assume the advertiser chooses to look at the actualdownloads driven from the Facebook mobile app install clicks, revenue driven from the user within a 90 day period of the download, and the assumed lifetime value of the download (typically based on an average revenue-per-download calculation done over the lifetime of the product).
When the marketer adapts his results to include offline and revenue metrics, he sees a much different story.
- App Store Downloads: Though Segment 1 drove more App Install clicksfrom Facebook compared to Segment 2 at a lower cost-per-install, far fewer people actually downloaded the app on Apple's App Store or Google Play.
- Post-Download Revenue:In the initial example, Segment 1 appeared more cost effective than Segment 2 using the cost-per-install metric. However, looking at the latent revenue associated with the download, it can be assumed that audience Segment 2 is more likely to make a purchase from the advertiser within the first 90 days following the app download.
- Lifetime Value: While Segment 1 drove a greater level of engagement and clicks with the advertiser's Facebook ad, over the long haul, a mobile app user in audience Segment 2 is worth more than Segment 1.
The results of this new optimization strategies were far reaching. After integrating new data points and adjusting its automated bidding strategy, the client saw lifts across the board in downloads, revenue, and lifetime value. Put another way, the online marketing team found it could increase ROI from Facebook mobile application promotion by 130 percent, just by changing its approach and optimizing to new metrics.
The results of the test have since extended beyond an improvement in ROI. Proving the value of its mobile app promotion investments eventually won the broader support of the executive team, which has since approved an increased budget for mobile and Facebook advertising initiatives.
This observation may sound simple, or even obvious. However, as advertisers begin to experiment with Facebook's mobile advertising solutions, many plan their initial strategies based on click outcomes: How much on-Facebook engagement and traffic can I drive to my mobile website or app store page?
At the beginning of a campaign, mobile investment on Facebook is typically small and viewed as experimental. However, as data is collected and results are analyzed, the advertiser becomes intrigued and open to increasing its mobile-specific budget on Facebook.
This stage is the marketer's inflection point when they realize that analyzing mobile app promotional results deeper in the purchase and revenue funnel is not only optimal, but necessary to satisfy the ROI requirements of their CMOs and CFOs.
As trends suggest that Facebook mobile usage is primed for significant growth over the next three to four years, expect marketers' interest in mobile app promotion will grow in parallel.
In order to rise above the imminent increase in costs and competition, Facebook marketers will need to adapt their approach to optimize mobile ad investments beyond the click and instead align campaigns with their ultimate business objectives – curating customer lifetime value and driving ROI.