Mobile user acquisition is still a hard slog. Listen to what the experts say about it.

User acquisition is a sexy topic. I know because I moderated a panel discussion on the topic at the Casual Connect conference last week in San Francisco. We had a standing room-only crowd listening to the experts that we rounded up to talk about the problem of acquiring mobile users for apps and games among a million competing choices in the app stores.

Competition is getting so fierce that in many cases, the cost of acquiring a user is exceeding the value you can get from that player. Smart companies are hiring user-acquisition experts to help design better strategies. Our panel included a few of these: James Peng, who handles user acquisition and monetization at mobile game developer Storm8; Andrew Birnbryer, the director of business development for North America at mobile marketing platform AppLift; and Matt Bruch, sales manager at sweepstakes company Liquid Wireless. In this session, I got the conversation rolling and then handed it over to the audience take over with the questions. The result was a useful conversation that went deep into the problems and solutions.

Here’s an edited transcript of our panel session.

Above: James Peng of Storm8, Andrew Birnbryer of AppLift, and Matt Bruch of Liquid Wireless.

GamesBeat: Everyone knows this is not a science. It’s voodoo or black magic. That complexity is going to be deciphered by our expert panel here, starting with James Peng, who handles user acquisition and monetization at Storm8. Next to him is Andrew Birnbryer, the director of business development for North America at AppLift; and Matt Bruch, the sales manager at Liquid Wireless.

We did a story this morning on AdColony and a survey they did of 4,000 developers. It said that app installs were everyone’s priority two years ago, but now they all say that high-quality downloads are what they want. At VentureBeat, we did our own user acquisition survey, covering 230 developers, and they voted on what solutions for user acquisition they liked. The rankings that came out, in order, were Google, Facebook, ChartBoost, AdColony, Flurry, Tapjoy, YouTube, Twitter, NativeX, and Playhaven.

For now, could you introduce yourselves a little bit more, and then we can talk about that list?

James Peng: I lead user acquisition and monetization at Storm8, a mobile developer. We have more than 40 titles on iOS and Android across multiple genres. We have 50 million unique users that play our games each month, and we were a top-12 mobile publisher in 2013.

Andrew Birnbryer: AppLift is a mobile games-focused marketing platform. We work with 90 of the top 100 game pubs around the world. We have 178 active game publishers around the world. We focus on ROI-positive spending. We have very high-level LTV optimization and an advertiser dashboard that allows you to optimize your campaigns. In turn, we work with more than 3,000 media partners across a variety of different channels, everything from apps to mobile web to OEMs to strategic partners. We’re doing TV now. We have retargeting. We have social. We have some very cool tech on our backend. We connect supply with demand and make sure we drive you high-quality users.

Matt Bruch: Liquid Wireless is Publisher’s Clearing House’s rich media ad network. PCH, each year, spends $36 million on advertising for direct response, TV, and a whole slew of other ad campaigns. When users come to our site, we monetize them with app downloads, direct response advertisers, and a variety of other methods.

Above: Storm8’s Candy Blast Mania mobile game.

Image Credit: Storm8

GamesBeat: You guys heard that list. What does it tell you about the state of user acquisition today?

Peng: Obviously, it’s a lot of different types of vendors there. It shows you that there’s a lot of different needs in the marketplace. Each vendor is showing up there for a reason. “Best” is very subjective. It depends on what you’re trying to achieve. If you’re trying to compile a leaderboard based on different objectives, whether it’s quality, volume, price, you’re going to have a completely different board.

Based on the combination of all these elements — looking at volume, quality, targeting, and price — Facebook is rightly in the position it is right now. But I’d say the arena is changing quite a bit. Especially this year, competition has increased. A lot of targeting options are becoming available. Things like Twitter and Google are starting to emerge. I feel like this chart will continue to evolve and shift over the next year.

Birnbryer: Everyone does things slightly different. It’s about focus and how you’re going to deliver. Facebook does a great job. Facebook does a great job because you give them every bit of data about yourself and tell them exactly how to market to you. If you tell me everything about yourself, I’m pretty sure I can sell you something. It makes sense that they drive high value and high quality because it’s all about targeting.

230 app developers with 9,000 apps and 397 million MAU
told us what works best in mobile user acquisition.

It’s also about focus. AppLift, we’re 100 percent games. We know games. We know how to find users for your games. If that was a list for who are the top mobile ad networks for games, I think we’d be number one. But what we can say is that everyone on that list does things very well. NativeX is a very cool platform that’s head and shoulders above what a lot of people are doing. Twitter, in and of itself, is going to be a big platform for the future. Being able to utilize that reach for individuals to push. I think we all expect, based on the quality of Facebook, that Twitter is the next step in social.

Overall, these lists are still subjective. It’s based on small sample sizes. It’s based on individual experiences. The more people you reach out to and talk to, you’re going to find that they have pros and cons for each option on that list. Some people will love some of them and some won’t appreciate them. But I can say that each of them delivers a product that has high value.

Bruch: If you think about Storm8, a major app developer in the space, they use AppLift as their main method for acquiring downloads, outside of some of these big guys. I give them a lot of credit. But to use our company as an example, this time last year we did not have much of a presence in the app space. We were doing less than 10,000 installs a month. Over the last year we’ve scaled that to more than 300,000 installs per month. A lot partners, especially in the social gaming and social casino space, consider us to be one of their top partners in terms of quality.

If you think about that, we didn’t exist much at this time last year. AppLift has obviously grown a lot. A lot of players are coming into the space and growing and showing that they can draw a lot of value. Those top lists will continue to shake up, more and more.

Above: Fiksu Index user survey results June 2014.

Image Credit: Fiksu

GamesBeat: Fiksu is about to report its June results for the surveys they do on the cost of a loyal user [and it has as of press time] — someone who opens an app three times or so. The numbers right now are at four-year highs. What have you guys observed about costs right now?

Birnbryer: If I said you’d have to spend $1.50 to make $2, would you spend the $1.50? Yeah. If I told you to spend $10 to make $15, would you spend the $10? It’s all about ROI positive spending. I can’t stress that enough. What we can do, and what pretty much every provider on that list is trying to do, is deliver that ROI positive spending. If you spend $1, let’s find you a user equal to $1.50. If it’s all the way up the board, we’ll find you a commensurate user. You should only be paying for what’s going to provide you an ROI positive return.

Yes, prices are going up. That’s a fact of supply and demand. More and more publishers are saying, “We want to get more users. We realize that driving them to our game is the only way to get on the charts and start making money.” But ultimately it’s about finding high quality users. If you partner with someone who can deliver a user that’s worth more than you spend, the price has no impact. No matter what, if you’re making money, it’s a win.

Peng: We definitely feel the effect of price increases. As prices go up, there is a theoretical maximum to what you can squeeze out of every single user. The margin does get squeezed. As costs go up, we have to get smarter.

Even though the cost of valuable and engaged users is going up, what I’ve seen is that the price of a less valuable user is decreasing. Advertisers are getting smarter about what they want and what they don’t want.

What we’re trying to do is counter these costs by making our spend more impactful for every impression that we show out there. We do that by understanding who our users are, what they want, and how to most effectively communicate that to them. That’s another way of saying, understand the source, understand the destination, and understand the medium through which you’re going to communicate.

Bruch: In order for a campaign to work, both sides need to be winning. Just being ROI positive is huge, but you want to make it so the publisher is in a place where they’re backing out to an effective CPI that works for them. They can go out and increase the spend that they’re doing and bring in more users. You need to strike a balance so that both sides are winning in that way. For us, that can help us deliver more volume.

To move into the app space, we had to find a way for it to compete with direct response advertisers – the insurance companies that have been working on our platform for a while. Some of those increased costs helped us transition into the space.