For the first part of this two-part series, we’ll be examining the motivations of mobile app users acquired through incentivized channels, the risks inherent in using these channels, and how to maximize install volume through bid management.

With an estimated 2.3 million apps in the Google Play and Apple App Stores, many mobile marketers make use of incentivized channels in some form or another to increase visibility and improve app rankings. Unfortunately, most fail to convert these largely passive users into loyal customers, watching their app rank plunge the moment they stop spending on incentivized channels. But with a few additional considerations, you can convert these otherwise indifferent users into active customers.

What are incentivized mobile installs?

Incentivized mobile app installs are a paid form of mobile acquisition, in which a user receives an advertiser-sponsored benefit in exchange for performing a task like installing and opening an app. Each time a user performs one of these tasks, the advertiser pays on a cost-per-install (CPI) basis.

The benefit that the user receives is usually in the form of in-game currency or credits for a popular mobile game, such as Candy Crush’s extra moves or additional gems for Clash of Clans. Unlike “non-incentivized” media such as search engine marketing (SEM), display ads (commonly referred to as “banners”), or event native ads (Facebook or Twitter,) users that find your app through incentivized channels typically discover it from one of several popular “offer walls,” such as TapJoy, Fyber, Native X, and Supersonic Ads amongst others.

TapJoy iPhone and Android Offer Walls

TapJoy iPhone and Android Offer Walls

These offer walls most often appear when a user reaches a critical point in her game play and is given the option of either purchasing in-game currency via credit card to continue playing or installing another popular app, in exchange for more in-game currency. The latter is a popular option for the user since she avoids ponying up her own hard-earned money and can choose any of the offers from the wall.

Each offer carries a different denomination of credit depending on the complexity of the task and the amount that the advertiser pays to the offer wall. For more complex tasks like registering for a service or even completing a purchase, an advertiser must pay more as it requires more commitment from the user, and as a result, fewer users complete the action.

TapJoy mobile value exchange

Mechanics aside, what’s most important is to understand the motivations of these users. A vast majority of users that are acquired from incentivized channels are purely motivated by the reward they receive, not the product they’re interacting with to get the reward. So the question remains: Why would anyone pay to acquire so many disinterested users?

The answer is app rank. Plain and simple.

Risks of using incentivized media

By purchasing large quantities of installs from these offer walls, often for between $0.50 to $2.50 per install (depending on platform, device type, timeframe, and desired volume,) mobile marketers can recognize a near immediate jump in app store rankings, thereby improving visibility of the app and hopefully attracting more high quality organic users. Or so the thinking goes.

Having a higher app rank can lead to more organic users, and the two are certainly correlated. But there’s little evidence to suggest that a high app rank alone results in a dramatic influx of new organic users. In fact, using incentivized media can be a risk if your app has yet to build a well known brand, has yet to achieve a favorable rating (4 stars or higher,) and its functionality isn’t intuitive from the name and icon alone. You may even end up spending tens of thousands of dollars simply chasing app store rank with little effect to your bottom line or major key performance indicators (KPIs.)

If you decide incentivized media is right for you, here are a few simple ways to maximize your budget and volume of installs.

Manage your bids like an SEM pro

Professional search marketers are great at analyzing and estimating the number of clicks that each paid search ad gets on a Google results page. They know that as they bid more, their position on the page improves, moving upwards from 8 — one of the lowest positions on the page — to 1, the most visible ad position on the page. Each improvement in rank is based on the advertiser’s cost-per-click (CPC) bid and garners more click volume than the one beneath it, since as your rank improves, you’re in effect more visible to the searching user.

Google search page screenshot

Source: Wordstream — How to Improve Your Ad Position
Distribution of paid clicks by positin and rank
Source: Search Engine Watch

Through this analysis, search engine marketers (SEMs) discover an optimal bid that yields the largest volume for what they’re willing to pay. Because incentivized channels are also bidded marketplaces, where your volume of installs depends on the cost-per-install (CPI) that you’re willing to pay, you can attain maximum yield if you treat it similarly.

Determining how much to bid

As you bid more per install, your app will move up the offer wall, driving more users to take advantage of your offer (install your specific app.) In order to manage your bids best, start by understanding how many installs you need to accomplish your desired rank. Tools like AppAnnie and Distimo are incredibly useful for this, telling you approximately how many installs the apps above you on the Apple Store and Google Play charts have per day.

Number of free downloads to hit top 25 per category

Source: Distimo — Quora Answering Series; Download Volume Needed To Hit Top 25 Per Category

Afterwards, its a matter of estimating the number of installs you’ll receive per day at the market-determined CPI (which can fluctuate based on competition and seasonality) in order to achieve your desired rank. Some app categories, not unlike paid search, are inherently more competitive. Insurance companies, for example, may have to pay upwards of $10.00 per click in a paid search setting to get adequate volume since insurance tends to be a very competitive market. Similarly, a mobile marketer may have to pay upwards of $4.00 per install (expensive for incentivized media) to compete for volume against larger freemium gaming titles, as they tend to spend more in mobile marketing than many other organizations combined.

It’s for these reasons that it may be prohibitively expensive to simply rank amongst the top 5 or 10 within your category, making it all the more important to understand your goals and the volume needed to achieve them. By doing so, you’ll be able to manage your bids more efficiently while maximizing volume.

Of course volume and bid management are only the beginning. Learn how to turn your incentivized mobile users into loyal customers in the second part of our series.

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