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💎 Growth Gems #84 - Monetization and Paid UA
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This week I’m sharing gems on:
These insights come from Alper Taner and Sviat Hnizdovskyi.
🥇 TOP GEM OF THE WEEK
Paid Acquisition: how to scale, creatives
Creatives and optimizing for the right events are the two levers often mentioned for good paid UA.
But other considerations are important as well. In Liftoff’s Mobile Heroes uncensored episode How to Efficiently Scale Ad Spend Beyond 7 Digits, Peggy Anne Salz (Founder at MobileGroove) and John Koetsier chatted with Alper Taner (App Growth Consultant) on how to assess which channel(s) to double down on, how to increase spend smartly, and more.
Don’t shoot yourself in the foot!
💎 You’re expected to lose some of the efficiency while scaling. It’s about finding the strategic balance. Example: losing 20% of efficiency while gaining 200% of users might be acceptable based on the company’s strategy.
💎 You need to act based on the campaign performance but don’t double budgets overnight when you see good campaign efficiency. Increasing budgets too quickly will most likely result in a big loss in efficiency and fluctuations in KPIs. Prefer small increases in budgets, each time keeping an eye on KPIs (20% increments per day will still increase your campaign budget very quickly).
⛏️ Going Deeper: beyond the % of the spend increase, Alper also shared that the timing of it is important. You need to take into account the learning phase as well as when you refresh your creatives.
💎 There are scenarios where increasing spend can improve efficiency. The reasons can be:
It gives more signal for the ad network algorithms to optimize
Your K factor (virality factor) generates organic uplift
Your brand awareness increases
💎 If you scale UA spend too fast, you lose the learning phase. It also makes it harder to understand how the algorithm and creative fatigue work.
💎 Before scaling ad spend, look at MarTech to ensure you track everything correctly and that your main metrics are measured accurately.
💎 Start scaling “vertically” (more spend on existing channels) until the marginal unit cost is no longer ideal. Then, scale “horizontally” (spending on other channels).
💎 When evaluating new channels, consider the balance between efficiency and scalability. Example: a 10% loss in efficiency might still be better if you can scale much more. Considerations for scaling also include reliability and how efficiency evolves as you scale.
💎 The learning phase is very important, for all platforms. Don’t upload a new creative into the ad set every week. This will lead to fluctuations. Instead, make changes every two weeks and bulk upload the test winners.
💎 You must ensure you have a wide variety of creative concepts, from animation to UGC, with different approaches to the problem or solution you’re focusing on. These days, what typically works is broad targeting with creatives aiming at the right personas.
💎 Look into the IPM of your creatives and how efficiency changes over time, including on shorter time frames (e.g., last 7 days instead of just the last 30 days). Don’t let your creatives die; be ready to replace them with your next best creatives.
💎 To improve your creative strategy, reverse-engineer the creative’s brief based on performance. Find the similarities amongst the winners and similarities amongst the losers. Slice and dice the opening, the thumbnail, the main character, the USP, the CTA, the duration, the format, etc.
💎 SKAN 4.0 will help us shift to longer-term optimization again.
Onboarding & Monetization: industry watch, paywall frequency, testing velocity
I loved hearing about his perspective then, so I also listened to his appearance in 240 A/B tests later: Two philosophies for optimizing your subscription app on ironSource’s podcast.
The themes were similar, but he did share some new gems.
💎 Take note of apps from companies that haven’t raised VC capital yet climb to the top of the charts. This most likely means they’re great at monetization and profitability.
💎 Start tracking some of the best-performing apps from a revenue-per-user perspective and try to spot differences over time in their paywall and pricing.
🤔 My 2 cents: I shared a gem from Darrell Stone (Head of Product at Citizen) in which he was saying that “The top charts are a scoreboard of who’s winning” and encouraging growth practitioners to “Become a student of the game”. I like Sviat’s idea to pay particular attention to:
The companies that did it without raising
The ones with good ARPU (at least based on the estimates from various tools)
💎 The framework that works for a product that acquires 500 users per day differs from the framework that works when you acquire 5,000 users per day. Example: if you can’t complete an A/B test within 1 or 2 weeks, it’s better to roll out a rather radical change (while trying to keep the UA mix similar) and then observe performance.
💎 When you start (especially if you bootstrap), and you want to run user acquisition, you have to be pretty “aggressive” with monetization to be able to compete on the ad auction. If you give too many features for free and don’t show paywalls frequently, then you don’t provide the opportunity for users to pay for your product.
🤔 My 2 cents: Sviat shared that ”Aggressive” has a negative connotation, and I agree, so I sometimes use “straightforward”. It’s also a spectrum, and you must find the right balance. But your app will have less impact if it doesn’t grow or if you can’t sustain it.
💎 Test adding one more paywall stating the product's benefits right after the initial screen, in addition to the paywall displayed at the end of the onboarding survey. Users might already have built some trust from your ad creatives, app store listings, etc. It does create high expectations on which you then have to deliver.
💎 Show the paywall on each app launch. A user opening the app means there is interest, so you can explain there are some premium functionalities that they are missing out on.
💎 Ideally, you assemble a cross-functional team to ensure a smooth transition from acquisition to the app store and then to product onboarding and activation.
💎 Even with a very optimized onboarding funnel and monetization, some apps could add +10/20% ARPU by just testing the copy on the paywall CTA. Example: Continue, Purchase, or something more sophisticated like “Try for free for the next 7 days”, etc.
💎 If you’re just getting started, don’t test micro-improvements.
Take 2 or 3 examples of what seems to be the best paywalls (e.g., Blinkist paywall, Flo, paywall with 3 subscription tiers) and measure the ARPU over time of these 3 tests.
Test increasing the frequency of how much you show the paywall
Then, move on to pricing tests to understand your pricing elasticity (e.g., there are “sweet spots” for yearly plans like $49.99, $59.99, and $89.99)
💎 One of the most impactful things you can do is increase your experimentation speed by saving time on engineering. One example is enabling remote configuration of all your paywalls and onboarding screens (via a tool or JSON files).
And before I leave, here is a quote on being patient when new ASA features are launched:
“Whenever you see something new in ASA, wait a couple of weeks/months until everybody tries it, and the competition fades off” - Matej Lancaric (UA & Marketing Consultant)
See you next time. Stay savvy!