Scaling Your User Base Doesn’t Have to Be Slow and Costly. Here’s How To Do It Right.

Scaling a user base requires great creative, systematic testing, and enough ad budget to run those tests. There is no way around it.

We’ve seen too many good products and apps fail because founders, CMO’s, or UA managers didn’t want to invest in creative and creative testing.  They wanted to scale their user base based on “the strength of the brand,” or on word of mouth, or on tactics like influencer marketing.

Once in a while, those things work. Word of mouth can be enough to expand a user base. But it almost never happens at the rate the UA manager wants, or in time to meet quarterly growth figures. App store optimization can also help – a lot – but it will only take you so far. Most marketing tactics simply aren’t as effective and as reliable as properly planned and executed performance marketing, aka data-driven advertising.

So while it might sting a little to invest $10,000 or $100,000 to scale up, it’s the best investment you can make. Great creative isn’t free, but it’s the difference between being successful and cost-efficient versus using poor ads that waste ad money. And it takes money and expertise to find and amplify that 100x creative. It requires an ad budget that doesn’t skimp.

How to Scale Your User Base

 

Your first month of advertising isn’t “wasted ad spend”

We can’t stress enough the importance of great creative. From what we’ve seen of running over a billion dollars worth of ad spend, it’s the creative that determines whether apps can scale or not.

If you want to stand out among the sea of ads and apps competing against yours, the creative has to stand out, too. Your creative has to nail your value proposition, employ proven conversion rate hacks, tell a compelling story, and look great. All at once. Without all those components in play, even a great app is likely to flop in today’s environment.

We’ve also reached the tipping point with AI-driven advertising platforms. While “the machines” can’t do a launch strategy or develop a creative strategy, they can take campaign goals and known success factors and weave them into a positive return on investment.

But even the machines need a body of information – a dataset, some ad spend – to get there. The algorithms are only as good as the information we give them. Without some account history, there is no data to interpret.

That’s part of why the money you’ll spend to build that advertising dataset isn’t “wasted ad spend.” It’s an investment…just as much as the wireframes of your app were an investment. You needed those clunky first drafts to produce the final product. There is no final draft without the first one.

The investment required to launch a new product

So the first month of advertising is never wasted. It’s the price you have to pay to reach month two and the type of ROAS you want.

Of course, none of this is new. PPC marketers struggled with this price of entry problem fifteen years ago, back when Google AdWords launched. John Caples and his peers wrestled with it back in the 20s. Launching a new product requires a certain investment to figure out which creative works.

Even now, with mobile app installs and value optimization and all the other conversion models, modern UA managers have, it takes a certain number of clicks and money, and creative to find out which messaging drives installs, and, eventually, high-value customers.

We can’t just flick a campaign on and have perfect campaign settings, perfect audience selection, and proven, 100x creative.

 

scaling your user base

What’s required for scaling your user base (or create one from scratch)

Even when the owners of an app understand this, there’s always pressure to minimize the learning curve. That can be done, but it still costs money.

We generally expect it to take a month to find the right combination of creative, campaign structure, and audiences to turn a profit. It typically takes 20 pieces of creative to find one true stand-out performance driver because only 5% of new creative will outperform the previous winning creative. With a 95% failure rate, heavy creative testing is required to become profitable unless a big win comes very early in the testing process.

That high-performance ad’s lifespan can be extended with careful audience modeling and manipulation, but its performance is eventually going to decline. Then you’ll need another 20 pieces of creative to find the new super-performer that can replace it.

So how fast will each piece of creative burn out – what’s the rate of creative fatigue? It depends… on ad spend, on audience size, even on the time of year. But to give you a rough estimate, a piece of creative that has $10,000 a week spent on it can probably last 2-3 weeks. A piece of creative burning through $100,000 a week may last only 3-4 days.

How much creative you’ll need is directly tied to your ad spend. Some advertisers might be able to get away with as little as 40 pieces of creative in one month. Other, super-high volume advertisers may need four to six times that amount. Fortunately, that’s not a problem. You can offset some of the risks with creative testing by relying on competitors – you’ll need to establish a process to identify profitable ads for competitors and to use those ads for inspiration in our creative testing process.

Three things that will definitely cause you to fail

While there are a lot of unknowns involved in scaling a user base, there are some things we’re very sure of:

1. Cheap creative will kill your chances.

UA advertising is just too competitive now to put out second-rate creative and expect “the power of the brand” or amazing word of mouth to make up for the difference. Without great creative, your app doesn’t have a shot.

2. Testing is essential.

Testing probably has the highest rate of return for anything you do in your business. Yep – anything. No matter who you are, no matter how amazing your brand or your product or your customer experience, if you aren’t testing, and testing like your company’s future depends on it, you’re losing money.

Creative testing is the single best way to grow. And simply doing a few tests won’t cut it. You need a hyper-efficient, strategic testing methodology that can reduce the time it takes to find new creative winners. Without this, you’re toast. So focus on building a creative testing process that’s designed to reduce the amount of spend required to test each variation. Fail fast on losers and scale winners quickly.

3. It’s time to hand over parts of campaign management to the algorithms.

The advertising algorithms have become better at bid management, ad placements, and audience selection than humans are. Facebook and Google’s ad platforms now reward (if they don’t outright force) advertisers that hand over these parts of campaign management to the algorithms. Trying to do these parts of campaign management manually will crush your chances for growth.

 

Scaling Your User Base Conclusion

Scaling a user base is expensive. We get it. It’s even more expensive for new app owners and teams who do not have as much ad budget as they’d like. But don’t view the early weeks of performance advertising as “wasted money.” Think of them as research.

Strong creative versus poor creative is the difference between making money and losing money. Any company that wants
to invest in paid acquisition must commit to the creative testing process.

There’s no way to know exactly what’s going to work until you’re in the game. Even with smart management, great creative, and a hyper-efficient testing methodology, it costs money to scale a user base.

It’s expensive. But it’s way less expensive than scaling a user base the wrong way.

So if you’re going to spend the money, why not get the results you want?

 

 

 

 

 

2019 Black Friday & Q4 Facebook Ad Playbook: How to Stay Efficient When Costs Rise

The holiday shopping season is upon us. For advertisers, Q4 and particularly the week surrounding 2019 Black Friday is unlike any other time of the year. Ad costs typically spike by 25% or more. The competition for quality inventory is fierce.

E-commerce advertisers are managing their boom time, while other advertisers – like mobile games and apps – are hoping to just close the year strong.

 

2019 Black Friday & Facebook Ad Playbook

 

Late Q4 is the busiest time of the year for retailers, so it’s not like the other ad platforms are quiet. But Facebook advertising gets particularly competitive from October through until December 23rd. But even though Facebook ads prices spike during late Q4, it’s still the best platform in town. Most major advertisers will be bidding aggressively.

Even with the inflated prices, most eCommerce advertisers will do well on 2019 Black Friday. A recent study from Shopify Plus showed that eCommerce marketers say Facebook ads are the most effective channel for new customer acquisition during the holidays.

2019 Black Friday

Of course, it’s no surprise that each year ads get more expensive around 2019 Black Friday, Cyber Monday, and all the December holidays. Every advertiser knows this. They just go into the season with a brave face anyway, ready to bid high to hit their annual targets. Anybody who’s ever looked at a Facebook Ads dashboard during the holidays has had to swallow a lump of coal when they looked at their cost per click.

And sure enough: 80% of eCommerce marketers say “rising ad spend” is a concern for holiday marketing.

2019 Black Friday

Despite the expense and the competition, Q4 is a massive opportunity. For retailers, it’s an opportunity to maximize the best buying season of the year. For mobile games and apps, the holidays precede the most cost-efficient advertising season of the year and what will be the lowest CPMs of 2020.

To help you navigate the season and do well on 2019 Black Friday, here are five Facebook advertising best practices for late Q4:

 

2019 Black Friday Best Practices

 

1. Manage Strategy Shifts in the Ad Spend Wave.

Done right, the ramp-up to holiday advertising can be as important as the holidays themselves. Advertisers can leverage retargeting, email lists, and other more cost-effective channels after December 8thif they’ve scaled up their campaigns properly before that.

2019 black friday

But don’t underestimate the after-Christmas shopping boom. Everybody likes to splurge with their Christmas money and buy themselves what Santa didn’t bring. That’s why the period after December 26th can be especially effective. Take this time to test out new device ads (like the iPhone 11), video, and new messaging/creative. And don’t stop until January 15th or even Valentine’s Day. Many traditional advertisers pull back their advertising at the beginning of the year, leaving another nice window of opportunity for the rest of us.

 

2. Increase Average Order Size.

When user acquisition costs rise, you have two choices for preserving profits: cut your overhead/product costs, or raise average order size. Fortunately, increasing average order size complements what’s going on in Q4 nicely – people are spending more, both on themselves and others.

There are plenty of ways to increase average order size:

  • Bundling products
  • Offering extra features for a discount
  • Using $-off discounts (“spend $X, get $ off” offers)

You may also want to just skip this average order size strategy entirely, too. Depending on your company and your situation, it could make sense to just go with a loss leader in Q4 and use it to build your customer base. 

If you manage the loss-leader strategy well, you could break even (or make a very slim profit), but you’ll add a ton of people to your buyers’ list. Pair that with effective retention marketing, and Christmas could be a nice opportunity to just find as many new customers as you can.

 

3. Wait it Out or Find Pockets Of Efficiency.

Of course, not everybody is in eCommerce. If you do app marketing or lead generation, the holidays present a very different problem. 

For Facebook advertisers who aren’t in eCommerce, the best time to scale spend during the fourth quarter is between October 1st through Thanksgiving. CPMs increase during that time, but not too much. Then we recommend you pull back or shift spend between November 28th through December 10th.

Here are some other suggestions to help you combat rising prices during peak CPM cost increases:

For Budgeting

  • If you’re going to spend money in the fourth quarter and you’re not an eCommerce company, try to frontload spend as much as possible in October and November.

For Audience Targeting

  • Focus on less competitive markets during high-demand periods.
  • Allocate more budget to Android. It tends to see a less pronounced increase in prices.
  • Leverage data from International campaigns to scale up in EMEA (Europe, the Middle East, and Africa), APAC (Asia-Pacific), and LATAM (Latin America) where holiday competition is not as intense.

CPM Trends

For Bidding

  • Scale-up Worldwide targeting by using value optimization to scale in global markets, while simultaneously optimizing for the lowest cost per purchase. That tends to preserve ROAS while making the expansion work.
  • Facebook research for its new Structure for Scale (S4S) framework has shown that ad set delivery stabilizes when an ad set achieves at least 50 unique conversions per week. They’ve found a direct correlation between ad sets that achieve this volume, reduced CPAs, and stronger ROAS. Occasionally the ROAS improvement can exceed 25%.
  • Start small with Minimum ROAS bidding, but use it. Minimum ROAS bidding allows advertisers to input their desired return on ad spend for each ad set. You can set a minimum ROAS with a number greater than 0.01%, then Facebook will stop delivering your ad if they can’t hit that specified percentage. It works best if you start by testing a low ROAS goal (<1%) against a broad audience, then inch up incrementally if performance is not there (1%, 2%, etc). Don’t start high and scale it back; minimum ROAS works better being incrementally increased.
  • Use AEO for Purchase Manual Bids. If you’re experiencing under-delivery or lower-quality conversions with autobid, consider switching to highly competitive smart bids (the lowest cost with bid cap). With unpredictable bid conditions like during the holidays, smart bids are a good way to maintain a stable delivery.

For Creative

  • Plan for more frequent creative refreshes to fight creative fatigue. You’ll probably have to plan ahead of time for this, as most employees want at least some time off around the holidays. Or, if necessary, look to a creative partner to expand capacity.
  • Develop holiday-themed creative to increase relevance scores. This can help reduce some of the higher costs of holiday ads.
  • Test Playable ads on the Audience Network to drive more engaged, high-quality installs. Facebook says these ads are getting the best performance of any ad format right now.

Fortunately, the expensive days do pass. Almost like magic, on December 26th, costs drop. Most of the eCommerce marketers have spent their budgets, sold their inventory, and consider the year done.

This is when non-eCommerce marketers – like games and mobile apps – have their heyday. They will enjoy some of the most efficient CPMs of the year from December 26th through to Valentine’s Day on February 14, 2020.

CPMs After 2019 Black Friday

CPMS

Take advantage of the drop in CPIs and influx inventory from December 26th through Valentine’s Day by using “Auction Sales.” After Christmas is also a great time to target new device users, and device-specific creative can often get you an extra bump in relevance. Of course, if you want to dominate the bidding during these magic days, you’ll have to have set aside some budget ahead of time.

 

4. Focus on Mobile.

Everybody knows mobile traffic now exceeds desktop traffic. But many marketers still believe “mobile traffic doesn’t convert”. Or, at least that it does not convert as well as desktop traffic. 

That might no longer be true. 

A study of Google Shopping ads revealed a dramatic increase in mobile conversion rates in the last few years. The conversion rates for shoppers who begin and end their buyer’s journeys on mobile devices have increased by 252%.

Conversion Changes

But wait… there’s more: “The path of shoppers starting their search on desktop and completing their purchase on mobile rose 259% year over year.” In other words, some people prefer to check out via mobile rather than on a desktop.

Of course, that’s Google Shopping, not Facebook ads. But Facebook did its own research. They also found that mobile users have become mobile shoppers.

mobile first shoppers

 

5. Use Video.

Suppose you have been hanging back from investing in video or investing more into video. Well, it might be the edge you need for Q4 2019. 

According to Facebook research, “Nearly 1 in 3 mobile shoppers surveyed in the US said that video is the best medium for discovering new products.” So if you want to get more buyers, make more videos – both for Facebook and Instagram.

And yes, Virginia, there is still enough time to get videos made before the major shopping holidays. 

 

Next Steps to Prepare for 2019 Black Friday

How will your company or agency manage the Q4 Facebook ad cost increases? Did your strategies for Q4 work well last year? Think about where you’ve been to strategize for where you’re headed. Just do think fast; 2019 Black Friday is upon us.

 

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