If you spend any time in mobile app marketing, you know that the vast majority of advertising campaigns are based on app installs. Whether an ad network or publisher is charging for impressions, clicks, or installs, the majority of app developers are backing everything out to a cost-per-install. We've started to see a shift. It's a shift I'm extremely excited about because it brings advertising back to a cost-per-action (CPA) for mobile apps.
Let's say you have a utility style app that's installed on millions of devices. Your users keep the app on their phone in case they want to book a trip, check in, listen to music, or pick up on a game they thought was interesting. Acquiring new app installs is certainly still important, but what if you could pay publishers and advertising channels for the users they re-engage, causing those users to return to your app and make a purchase. Wouldn't that be worth something?
We have to start thinking about the value of a user's actions beyond the install. What is a purchase in your app worth to you? How would this impact your budgets?
Imagine how this impacts the monetization of social media traffic. Though it might be likely that a user sharing their app experience on social media might be broadcasting to others that already have the same app installed, perhaps this re-engagement causes a new purchase decision or in-app action. Incentivizing marketing and advertising partners by paying for this actual revenue event will only drive more quality users to make more in-app purchase decisions.
We've already seen major travel apps and mobile games testing these programs out, and so far they've been met with incredible success. One hurdle it leaps over is the need for marketers to prove the value of newly acquired users (or installs). There was a time when pure volume of app installs was enough to get you ranked in Apple's top 25, launching your app into unbridled organic success, but as competition stiffens and Apple continues to tweak its ranking algorithm, more bodies doesn't equal success.
This type of CPA compensation for advertising mobile apps also opens up new doors for incentivized traffic. Massive ad networks with huge inventory and wide-reaching publisher software development kits can be compensated for the real in-app purchases they influence. Regardless of the lifetime value of these incentivized users, the app developer knows they at least received a monetizable action from the user, and as long as they keep sight of their margins, they can compensate their advertising partners accordingly.
Now let's talk about tapping into publishers on the mobile web.
A great deal of online traffic is already shifting to mobile web, and much of that inventory is going to waste as publishers continue to improperly target their mobile users. Instead of selling it off at remnant prices, publishers are beginning to enter the CPA world by driving their traffic to make purchase decisions in mobile apps, and advertisers have no problem paying for real sales and acquisitions.
Ad networks and publishers should have the possibility of being compensated for clicks, app installs, in-app purchases, other in-app events, and even app re-opens, and they should have the ability to measure these actions separately as individual campaigns or together. From there, app developers need more insight into the lifetime value of those users to determine what those actions are worth to their business. If both app developers and publishers have transparency into the same user metrics, then we finally have a real foundation for negotiation and a starting point for building relationships with long-term growth opportunity.
Peter Hamilton is CEO at HasOffers.com and mobileapptracking.com.
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