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BizReport : Mobile Marketing : August 28, 2019

How publishers can capitalize on app user LTV

The lifetime value (LTV) of a consumer has always been important to merchants and brands, but lifetime value, especially in the digital space, can be hard no only to measure but to strategize. Here are three tips to improve the lifetime value of mobile consumers.

by Kristina Knight

Kristina: What in-app monetization trends are you currently watching?

Offer Yehudai, President, Fyber: We believe the most important monetization trend for apps over the next two years will be the adoption of app bidding. At the moment, only about 10% of inventory is traded programmatically, and we'd like to see that number grow.

What's holding it back? At the moment some of the dominant in-app buying platforms don't feel particularly compelled to sell programmatically. Since business is going very well for them It's difficult for these companies to build a case for investing in new technology when they're currently making 30% margins. But we see this as a risk. Take Rubicon, a company that was late in adopting header-bidding for the web, consequently lost 35% of its stock value.  Right now we see programmatic buy-side platforms emerging for in-app, and we believe that publishers will adopt them en masse in order to drive yield. So we really encourage all players to adopt in-app programmatic, and especially app bidding.

Kristina: What benefits are there to app monetization?

Offer: There are two main ways to monetize an app: in-app purchases (IAP), such as buying a game's currency or paying to access content, or advertising.

The benefits to app publishers are obvious: monetization means revenue that can be used to fund growth and to secure their futures. For instance, publishers of mobile games can use revenue from advertising and in-app purchases to develop new games and acquire more users.

The benefits to advertisers are just as compelling. For starters, it's a way to reach consumers at scale. We've said before that mobile games are the new TV given that so many players, of all ages and genders, play them. More than that, mindshare is high, when people open an app it's for a specific purpose, which means that app has 100% of the consumer's mindshare at that moment. 

Kristina: What are some of the issues brands face when advertising in app?

Offer: The biggest challenge is the ad-buying infrastructure itself. At present the waterfall approach never really gives advertisers  a fair chance to reach the consumers who are critical to their campaigns since buyers are ranked based on their historical performance, not what they are actually willing to pay for that impression. This challenge can be addressed with app bidding, which is why we actively promote its adoption.

The other challenge is that when brands advertise on the web, they have access to precise targeting, as well as tools for measuring and validating an audience, and ensuring that their ads are in view. The in-app market isn't as mature as the web, although the industry is making tremendous strides in terms of measuring viewability, detecting and blocking fraud, measuring data quality, and so on.  

Kristina: How can publishers better understand the lifetime value of consumers using apps?

Offer: There are some exciting new developments that allow app developers to understand the holistic LTV of their users, and optimize the app experience based on that LTV (more on that below). 

App developers carefully track who their spenders are, and are keen to customize their experience in order to boost retention, and of course, spending. In-app purchases (IAP) account for 50% of a publisher's revenue, and so they are hyper focused on IAP LTV. 

But in-app purchases (IAP) only tells half the story; some users engage with ads more frequently than others, and for that reason they're more valuable to the publisher. Until fairly recently, publishers only received aggregate data for the ads shown to their users, so they had no way of knowing who their ad whales are. That's changed, thanks to Fyber's Impression-Level Revenue Data solution. This solution attributes each impression, along with the price paid, to the individual user who engaged with the ad. This means that publishers can calculate the ad LTV of their users.

By combining the IAP LTV with the ad LTV at the individual user level, publishers can now calculate a holistic LTV of their users. This is now possible thanks to the partnership between Fyber and Game of Whales.

Kristina: What are your top 3 tips to improve apps lifetime value of users? 

Offer: As app ad monetization becomes increasingly programmatic, impression data is real-time data. This accurate ad LTV data, when combined with IAP data, allows publishers to accurately calculate holistic user LTV. With this, publishers can manage the individual user experience with the highest level of granularity.

#1: Create custom experiences based on monetization profiles
Publishers can refrain from showing any ads to high in-app spenders, maximizing their retention, as well as create specific retention and reengagement campaigns for individual users. They can also target ad whales with cross promotion campaigns, and create lookalike audiences for advertisers to maximize the impact of UA efforts.

#2: Optimize monetization strategies
Game developers tend to follow standard templates for monetizing their apps. For example, mid-core developers typically "time gate" their advertising, releasing ads after a set period of time. By better understanding which users are ad whales and which are IAP whales, they can set time-gates based on the monetization profiles of individual users.

Conversely, there are some users who will never purchase in app. By identifying these users automatically, the publisher can monetize them via advertising. 

#3: Leverage rewarded ad formats
Rewarded ad formats are a great way to allow users to get deeper into game play, and ultimately get hooked. They can be an important stepping stone for users who are new to a game, and are testing the experience prior to making an in-app purchase.

Tags: advertising, appvertising, consumer LTV, Fyber, in app monetization, lifetime value, mobile commerce, mobile marketing

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