How to create demand for your mobile app – page 2

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How to market a mobile app:

Performance Marketing: The specific type of marketing you need to do to sell mobile games, apps or other content like video/ringers/ringbacks is called performance marketing. As the name implies, the goal is to find a prospect through advertising and actually get them to take a purchase action. This is definitely the most difficult form of mobile marketing and will require you to do almost everything perfectly in order to succeed.

Calculate CLV: The first thing you need to do when setting out your marketing plan is to establish your CLV (customer lifetime value). You need to know how much a customer is worth to you financially over their lifetime. For a subscription product, this is often modeled by understanding the average customer retention rate and establishing an average number of months that a user stays subscribed. This is quite complicated to do, and in fact you may not even know your numbers if you recently launched, but generally there is a high attrition rate early in the cycle followed by a very slow, steady decline where a subset of users stay subscribed for a very long time.

A typical average retention rate for a decent product is five months. If that product retails for $3.99 per month and you receive 60 percent of the retail price as a royalty, your CLV is 60 percent x $3.99 x five months = $11.97. In other words, each customer is valued at approximately $12 over their lifetime, so you will need to make sure that your acquisition cost is below this number to be ROI-positive.

Sales Routing: Probably the most important decision you need to make is where you are going to send your qualified sales leads to make their purchase. If you present the user a "buy" button, where and how do you take their money and deliver them their product? While it may be tempting to set up your own mobile storefront and take payments directly, there is also an argument to be made for sending your click traffic over to one of your retail store partners. The reason is that these storefronts are likely to reward your marketing efforts with better product placement, which will also increase your sales.

At the moment, I like driving traffic back to the carrier decks because the royalty payout is good and because the user can direct their purchase directly to their carrier bill. That means there is no prompting for a credit card, entering PayPal information, or the like. However, there are many other storefronts you could direct traffic to, and it pays to coordinate that strategy for maximum benefit, often on a device-for-device basis. In other words, where you send your Sprint Nextel BlackBerry traffic could be completely different from where you send your T-Mobile USA BlackBerry traffic.

Driving Traffic: You typically purchase ads from one of the many ad networks that aggregate inventory from multiple mobile websites. Once you get more sophisticated, you'll come to the conclusion that you'll need multiple ad network relationships to optimize and tune your campaigns. All of the ad networks have helpful sales reps that will configure your ad placement to match your product profile. Naturally, the more you spend, the more service you will receive.

There are generally two ways to purchase banner advertisements, CPC and CPM. CPC (cost per click) is the most prevalent for mobile marketers because you only pay for the actual number of clicks on your ads. CPM is a pricing method where you pay a fixed fee on the number of times your ad is actually viewed, regardless of how many people click on it.

For the sake of drawing a comparison, let's say you can buy clicks (CPC) for 10 cents each vs. buying impressions for $10 CPM ($10 for 1000 impressions). If you literally had the option of running your ads on the same channels for either one of these two pricing models, the breakeven between the two would be 100 clicks. (100 x 10 cents = $10). So if 101 people click, you'd be better off paying via CPM. If 99 people click, you'd be better off paying per click.

Unfortunately, life is just not that simple! This is because the ad networks are not likely to offer you the same channels for those two pricing models. In other words, if you're fishing at $10 CPM, you're fishing in different waters than when you're fishing at 10 cents CPC. So while it may at first seem absurd to ever pay CPM rates, the quality of the inventory may be high enough to justify it. That's experimentation you'll need to do.

Another popular method for driving traffic to your product is to sponsor a search result. Companies that offer mobile search include sponsored results at the top, which the user is quite likely to click on since the result is relevant to their stated interest.

Calculating conversion rates and costs. There are several metrics that marketers use to determine the success of a campaign. These metrics, their evaluation and interpretation are beyond the scope of this article and will need to be addressed later. However, there are three basic measurements that are fairly straightforward and common to most campaigns.

First is the CNV (conversion rate). This is a ratio, expressed as a percentage, of the number of unique people who entered your marketing system vs. the number that went on to take an action. In other words, if your CNV is 20 percent, it means that one out of every five people took an action you could measure.

Second is the Cost Per Action, which we don't give an acronym to (thank God, right?). This is the measurable cost for you to get someone to take action on your advertisement. It's sort of an interim percentage because it doesn't necessarily represent success, given that a prospect could still bail out of the process. The reason it's important for mobile marketing is that we typically drop a user into the carrier's "buy page" where they are presented with an advice-of-charge. It is easy to calculate the cost of sending someone to that buy page (thus, the cost per action). It may not, however, be easy to ascertain exactly how many people actually bought from that link.

Third, the CPA (cost per acquisition). This is the ultimate number to measure because it directly represents the cost for you to convert a prospect into a paying customer. If your cost per action is $4.00, and you have a 75 percent success rate from buy-page to actual purchase, then your CPA is $4.00 / 75 percent = $5.33. The simplest measure of success is to compare your CLV to your CPA. If your CPA (cost to acquire) is $5.33 and your CLV (lifetime value) is $11.97, then you're paying $5 to make $12, and that's obviously good. Of course, this is grossly over-simplified because there many factors one needs to consider when calculating success. Let's look at one of them, the "halo effect."

Halo Effect: I've seen some articles that talk about the halo effect as some kind of abstract concept that's not explainable. It is the concept that your sales trajectory increases even after you stop directly marketing and/or you see an increase in sales beyond your actual count of conversions. The halo effect is actually not that abstract and can be quantified from a few key factors.

First, whenever you do marketing, there are a number of people who "get" your message but don't immediately take action on it. In fact, many marketers believe that the people who click the most are actually least qualified to purchase. That said, they're left with a solid brand/product impression and may have been moved along to purchasing intent, but didn't actually press the buy button at that moment. They'll buy later, but you won't be able to necessarily quantify it.

Second, you're spraying lots and lots of banner impressions out there which are reinforcing your marketing message. Even if people don't click, they see the ad and over time will remember it. When they are later faced with an opportunity to purchase, they'll recall your marketing and take action. This is essentially how all retail product marketing works because the customer is supposed to remember which brand of toothpaste to buy when they're actually in the store in front of the toothpaste aisle. They didn't buy the toothpaste on the web or pull over when they read the billboard on the highway, they registered a mental purchase intent that they acted on later.

Third, the storefronts are grateful for your marketing and will often reward you with feature placement during your campaign. The increased position (discoverability) of your product, blended with the air cover of your unclicked impressions, blended with your deferred purchase intent prospects, all combine to create an overall lift in sales (the halo), without being directly attributable to any actual clicks. Scientists hate this because it doesn't compute, but marketers know that the halo effect is real and legitimate.

So, does it actually work? The answer is yes, but it's complicated. Mobile performance marketing is part art, part science, and a tiny bit of luck thrown in as well. But it's a subject you can't afford to ignore if you're a mobile publisher. With the tsunami of apps coming as the walled gardens collapse, marketing is critical to making your product stand out in the crowd. More next time.

Konny Zsigo is a 20-year veteran of the wireless data industry. His company, the WirelessDeveloper Agency, creates and executes mobile Web marketing campaigns to directly increase content sales and drive users to action. WDA also supports mobile publishers with North American distribution, licensing and production of mobile content (video, games, apps, ringtones, wallpapers, themes and more).

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