Facebook recently announced a change in its settings that enables users to self-report their gender by using about 50 different classifications. It’s the social giant’s latest move that serves both users and advertisers alike, and it represents a striking reflection of what scale means at Facebook.
To understand this, I want you to re-imagine Facebook’s audience not as 1.23 billion users, but rather a thousand communities of 1.23 million people each. That’s a population seven percent larger than the entire audience the CW television network attracted this past Friday evening. I use this conceptualization for illustrative purposes, not literally, but I think you’ll get the point by the time I’m finished.
These massive communities have not come to exist by accident. Facebook’s growth strategy of first perfecting the user experience while attracting hundreds of millions of users all over the world, then acquiring data about its users’ demographics and preferences, and only then building an advertising business capable of generating meaningful revenues has enabled it to create the closest thing to a symbiotic relationship between advertiser and consumer the world has ever seen.
That’s because Facebook uses the information we share about ourselves – our locations, marital status, the things we like and yes, our gender – to create thousands of audience segments, thus enabling advertisers to design and deliver messages very precisely. If, for example, a movie studio wants to promote its new film to mothers living in the southern part of the U.S. and who like Disney animation and Papa John’s pizza, Facebook probably could deliver more of them than any alternative.
The meaning and value of scale has game-changing consequences for mobile marketing and monetization. If you’re a mobile developer or marketer, unless your app supports a high value transaction, e.g. purchasing airline tickets, booking hotels, or physical goods, you need to focus on acquiring a meaningful, measurable audience if you are going to achieve your business objectives. In other words, you need scale.
The alternatives look bleak. In just three years, Gartner forecasts that 94.5% of all downloads will go to free apps. In-app purchases, e.g. buying a sword to help complete a gaming level, are rare: this report shows that only 1.5 percent of all gamers buy something via in-app purchase. (That number, incidentally, is in-line with other forms of direct response marketing, which is why direct mail and email need to target so many users to pay off.) With gaming representing the largest category of mobile apps, it’s likely that gamers are representative of the larger universe of app users.
As in any other business, increasing revenues requires some combination of persuading your existing customers to spend more or attracting more customers. This is true regardless of how you monetize your audience.
Here are a few suggestions on how you can get customers to spend more:
- Define your most valuable customers: Do you know who spends the most currently and what attributes they have in common?
- Give them more ways to pay: Not everyone has a credit card, so think about alternative payment methods, such as gift cards or operator billing.
- Smaller items and lower prices: There’s a reason why Hershey’s and others adopted a line of miniature versions of their core products. They found that some consumers eat more when the portion sizes are small enough. Can you offer miniatures of your own?
- Experiment with different pricing schemes: Try enabling your customers to purchase subscriptions, use discount offers, or give away premium content for free for a limited time. You’ll quickly determine what works best for your highest paying consumers.
- Create more ways to consume: Once you’ve defined your target audience, give your app every chance at being ubiquitous by targeting the platforms and devices they use.
Increasing the audience for your mobile app is hard, but I recently wrote a blog post that gives mobile marketers several suggestions, most of them free, that can do just that.
Scale means different things to different businesses. It’s important that you take the time to determine how many users you need in order to achieve your objectives. While I’m hard pressed to think of even one example of a company that can achieve Facebook’s scale and customer insights, the Facebook approach – know your customers, acquire scale, and build monetization into your product development plan – is more likely to enable you to win.