Managing The ROI Of Your Mobile App

Eighteen years ago, I was working the toughest job I’ve ever had.

I was a new and used car salesman.

Having grown up in a suburb of Detroit to a father who worked for General Motors for 31 years, cars are in my blood. Back then, I aspired to open a Saturn car dealership. The only way I knew to advance that ambition was to work for one. For two years, I was an average car salesman in every way except one: my longevity in a business that sees about 100 percent employee turnover annually.

The hardest part about selling cars is dealing with the public. I recall one customer who could not stop fixating on her monthly payment. I’d show her the Saturn’s polymer body panels. She’d ask “What’s my payment?” During the test drive, I taught her how to apply antilock brakes. Her response: “What’s my payment?”

Mobile app marketers and developers need to be asking a version of the same question about their economics. Specifically, they need to ask “What’s the ROI of my app?

A couple of weeks ago, I met Ben Legg, CEO of AdKnowledge, a digital marketing company that, among many other things, helps its clients run mobile install programs on Facebook. It works like this: developers and app publishers can purchase ads that leverage Facebook’s richly faceted customer data and look like wall posts. When users click on the ad, they can initiate a download of the app. Facebook charges developers and app publishers a fee every time a customer installs an app via this program.

Ben offered some very practical advice to developers who buy services like Facebook’s. First and most important, make sure you can generate revenues that are at least three times the cost of the install of every app you pay to get downloaded. That will ensure that you pay back the download cost plus cover the cost of development and other overheads. Second, segment your audience thoughtfully. Monitor performance continuously to see which ones deliver the most downloads and which ones go on to become the most profitable based on their actual usage.

If you’re a mobile marketer or developer, you’re likely making revenue in one of three ways: one-off purchases, in which a customer buys your app; “freemium,” in which customers download for free and can buy things in the app; or in-app advertising. If you’re contemplating increasing distribution of your app via a pay-per-install program like Facebook’s, take the time to model your estimated revenue before you take the plunge. If you can make revenues that are 3x more than the cost-per-download Facebook charges, then you’ve found a productive way to get more users.

If you’re not so sure you can earn that kind of return, it wouldn’t hurt to contact AdKnowledge.

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