How to Step up Your Mobile App Retargeting Strategy

Alexei Chemenda, CRO for Apps and Managing Director, U.S. at adikteev, shares lesser-known tips for improving and measuring your next mobile app retargeting campaign.

Retargeting is a proven tactic for driving retention and in-app activity, and in turn, the lifetime value (LTV) of a customer. For mobile app marketers, retargeting is a natural extension of push notifications. It allows you to bring users back to an app by sharing updates, new content or incentives. Leading apps have been using retargeting for the last three to four years, and the rest of the space jumped onboard about two years ago. But although retargeting isn’t new, most app publishers haven’t mastered it.

Although retargeting isn’t new,
most app publishers haven’t mastered it.

Mobile advertisers are using all types of retargeting strategies, some that work and some that don’t. Many marketers are making the same mistakes in both the execution and the measurement of their campaigns. Let’s take a look at some lesser-known retargeting best practices that will improve your next mobile app retargeting strategy.

1. Retarget active users, not just lapsed users

Most publishers deploy retargeting to bring back customers who have stopped using the app. But you can also –and more importantly– use retargeting to communicate with active users to drive more sales. I play Golf Clash a few times a day, but almost every time I am served a mobile ad with an incentive to buy something–a new club or golf ball–I take action right away. Those are purchases I would not have made otherwise. Here’s the beauty of Golf Clash: they are not even retargeting me with specific ads. They are typical “app download” creatives, however, they are showcasing items I haven’t seen before, therefore creating an urge to play/buy. This process improves my LTV, even though I am already a fervent fan.

2. Let go of preconceived notions about frequency capping

Many app publishers struggle to drive monetization without compromising the user experience. Retargeting is a balancing act, too. Serve one too many ads to the same user and the ads will go from effective to invasive. But the turning point is different for every app. It depends on the audience, vertical and the app’s brand equity since ads are more powerful if an app publisher has already built a reputation.

To determine your best frequency capping strategy, number the ads you are serving to the same user (#1, #2, #3) and attribute every action to a specific ad number. Then you can note if users are taking action after ads #1, #2, #3, etc. and more importantly, the incremental value of each impression to answer the question: “what if I had stopped at ad #2?” This will help you determine the number of ads that generate the most lift, as well as when you should stop serving ads.

There is a huge discrepancy in what works best, so measure carefully. I have worked with clients who have needed to cap their retargeting campaigns at three or four ads because users stopped taking action. I have also seen campaigns in which any frequency capping reduced performance. Every single retargeted impression – even the eighth ad served to the same user—drove incremental action.

3. Invest in your creative

Marketers spend big money developing intricate ad experiences for their user acquisition (UA) campaigns, but when it comes to retargeting, many slap a static banner together and call it a day. The better the creative, the better the performance. That rule applies to all of the mobile advertising, including retargeting. Put effort into the creative for your next retargeting campaign, and don’t be afraid to experiment with playables. They work for retargeting, too.

4. Measure incrementality, not ROAS

Retargeting works, but marketers often give it too much credit by measuring it incorrectly. Return on Ad Spend (ROAS) is a solid metric for evaluating UA. Spend $10K to acquire 1,000 users who spend $20K in aggregate and, well-done, your ROAS is 200 percent. But this won’t give you an accurate picture when you are reaching people who are already active in your app.

When retargeting active users, you run the risk of giving your retargeting partner credit for actions that would have happened anyway. Your ROAS looks great, but you don’t realize that you are wasting ad dollars since some of your users would have made purchases organically. This happens all the time. Advertisers, encouraged by the high ROAS, scale their campaign, not realizing that they are failing to drive incremental value.

To adequately evaluate retargeting, you need to measure incrementality. To do so, I suggest using the intention to treat (ITT) protocol, which is widely-adopted by clinical researchers testing new drugs. To do so, randomly split your audience into two groups—a control group and a target group. “Random” is a keyword, as the groups should contain the same makeup of users. For example, you can’t have all your active purchasers in one group and inactive users in another.

One objective way to divide them is by using SHA-1 to hash device IDs. This will give every device ID a numerical sequence. Then you can place every device that ends in 0, 1, 2, 3 or 4 into the control group and device IDs that end in 5, 6, 7, 8 or 9 in the target group. For the sake of this example, let’s say we split our users 50/50. Half go into a control group and the other go into a target group. The control group will not receive retargeted ads. The target group will.

Typically, incrementality is measured over six to nine weeks, depending on audience size and campaign budget — enough time to reach a significant percentage of your audience. When the campaign ends, compare the total spend of your target group with the total spend of your control group and compare that difference to your ad spend.

Let’s say you spend $15K on a retargeting campaign. Your control group makes $10K worth of purchases. Your target group spends $30K.

  • $30K (target group spend) – $10k (control group spend) = $20K
  • $20K (difference between target and control group spend) – $15K (your ad spend) = $5K

The incremental value of your retargeting campaign is $5K.

This is a much more effective way to measure your retargeting efforts and will help you avoid misattributing actions to campaigns that aren’t actually adding value.

Retargeting is not new, but there are prevailing misconceptions that are compromising the effectiveness of the tactic. These overlooked best practices in execution and measurement will help you derive more value from retargeting, and from your users.

Originally published on MarTechAdvisor.

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