One tactic that many app developers use to obviate the “chicken and egg” problem with mobile user acquisition is to outsource the mobile marketing function to agencies in the initial scaling stage of their app, allowing the developer to focus solely on their product without completely foregoing paid acquisition.
One problem with this approach is that it relegates user acquisition to a non-core, non-essential function — second to product development — when that really is not the case: a mobile-first company requires a sound, scaleable mobile growth strategy in order to be successful. The second problem with this approach is that it is possible for the operating incentives of mobile marketing agencies and their clients to be misaligned. Without directed, efficient mobile advertising campaigns being run for its app, the developer doesn’t truly learn anything about its app’s potential and the resources it should dedicate towards marketing once it brings that function in house.
How should a mobile app developer manage its relationship with mobile marketing agencies, both from a practical, logistical standpoint as well as with an eye toward team development, in order to achieve optimal results that are consistent with the company’s long-term growth goals? Below are five tips for working with mobile advertising agencies.
Take as much of the pain upfront as you can.
Working with a mobile marketing agency doesn’t mean relying on them for everything; your company should still operate elements of marketing infrastructure and analytics such as measurement, analysis, and reporting. The purpose of working with a mobile marketing agency is to fill functional gaps that you can’t (or shouldn’t) address with hiring.
Analytics is a fundamental skill for a mobile app developer to have, whether that be product analytics or marketing analytics; you should still put the work in around instrumenting and collecting marketing data, even if you don’t have an internal team do media buying. Taking this pain will not only give you control over evaluating the performance of an agency, it’ll also make it easier to eventually grow your marketing team.
Establish unambiguous performance benchmarks upfront.
You need to be as clear as possible about your expectations around performance in very exact, metrics-oriented terms. If you want ROAS or daily install volume to be at a certain standard, you should articulate that to your agency account manager and also include that as a term in your statement of work with the agency.
Make sure that you are setting the performance standards of the engagement as they relate to your business goals; you shouldn’t accept standards from the agency based on what they feel confident that they can deliver. In other words, if your business grows at 120% ROAS by day 90, then that should be the expectation of performance from the agency you work with. Of course, if you’re jejune about setting performance goals (eg. 150% ROAS by an impossibly short cohort timeline) or try to over-engineer your performance standards (eg. stipulating CPI, CTR, payer conversion percentage, and ROAS goals), then you’ll run into adverse selection issues as the best, most qualified agencies dismiss your account.
Operate against your definitions, not theirs.
Related to the first point: you need to measure and derive the metrics by which you evaluate success. Think about measurement as a system of checks and balances: if the agency is accountable for not only operating the campaigns but reporting on them, then you deprive your company of audit oversight in the engagement and are susceptible to being misled or misdirected. Campaign performance should be reported from your attribution account, your cost aggregation account, your ad accounts, and your internal reports and dashboards.
Handling measurement internally is important not only to avoid any conflicts of interest but also to force the discipline of business planning and growth strategy on you even before you’ve built an internal marketing team. If you don’t know how your business actually makes money — what your payback windows are, how acquisition costs increase with scale, what types of creatives resonate best with various target audiences, etc. — then with or without an agency running media buying, you’ll never be in a position to drive systematic user base growth. This form of fundamental knowledge about how your business grows is a precursor to building a scalable user acquisition function.
Focus on the fundamentals and don’t allow yourself to needlessly get upsold.
An agency might try to sell you on lots of exotic, colorful campaign strategies, but you should focus their efforts on scalable, reliable sources of traffic first before experimenting with anything else. Television advertising, programmatic advertising, influencer campaigns, events advertising, etc. might sound more exciting than Facebook and Google, but Facebook and Google are almost certainly essential to your business’ long-term viability as marketing channels.
This isn’t to say that you shouldn’t use an agency to handle new and non-standard channels and campaign formats for you. But if you are leaning on an agency before building out your internal marketing team, part of the advantage of the relationship is learning how to operate your product’s core marketing channels — and gathering the data that operating on those channels emits for your own use — so that you can onboard those channels yourself once you are ready to hire a team. In the early stages of an engagement, and especially as you are feeling around for a consistent growth strategy, your agency should focus on the channels that will scale you into viability.
Work against an onboarding goal and slowly internalize channels and formats as you scale your team.
If you are working with an agency as a stopgap before hiring a team, then you should be onboarding channels (and hiring people to manage them internally) as you identify the ones that work for your product. As you see a channel scale to support growth in your product, you’ll likely reach a point where the agency fee (which is usually a percentage of spend) eclipses what you’d spend on a full time employee to run those campaigns for you (assuming the same level of media buying efficiency).
There could be a management calculus that prefers using an agency to hiring internally to avoid organizational complexity, but assuming the company is working purely on the basis of expense reduction and internalization of domain knowledge, as soon as it’s clear that 1) the product is viable with paid user acquisition and 2) the agency costs more than internal employees would, you should begin the process of onboarding a dedicated marketing team.
You may decide to continue working with an agency for long-tail traffic even after a team is hired, and of course finding and hiring a capable mobile user acquisition team is no small feat, but if your goal in working with an agency is to reduce the opportunity cost of not growing when you can and maximizing growth when you are ready via an internal team, then you should be operating with an eye to hire a mobile user acquisition team as soon as it is economically preferable to paying an agency a percentage of spend as a fee.
Photo by Karsten Würth on Unsplash