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YouAppi White Paper | Building Your Mobile Business Right

Using Predictive Learning to Reach the Right Customers with the Right Mobile App

Cohort analysis—a Big Data-powered approach for making every ad impression more valuable

Low-value impressions are just as much a problem for inventory owners, too. Poorly targeted ads make for a poor user experience, alienating a publisher’s audience as quickly as its advertisers.

Big Data analytics provides the raw material to fuel the kind of precision targeting app and inventory owners both need. Cohort analysis, a pioneering approach developed by YouAppi, puts this data to work to drive more effective advertising. By performing deep analysis of the cohorts within each channel, marketers can make accurate predictions of user behavior across the customer lifecycle—and determine which

inventory will best deliver the specific KPIs that matter most to your business. An adaptive platform enables continuous optimization to help each impression you deliver reach the right mobile users.

In this white paper, you’ll learn about the market forces driving the need for more effective mobile ad targeting; the rising importance of data for marketers, brands and agencies; and the use of cohort analysis to deliver the right app to the right person for high-value customer acquisition.

Overview

Once upon a time, mobile app owners focused on driving as many downloads as possible; the only KPI that mattered was scale. Today’s more sophisticated developers understand that not all customers are equally valuable. You can’t build a strong, sustainable business on people who forget about your app the day after they install it. However you measure success—long-term engagement, extended visits, large or frequent purchases, social shares—you need a way to find the right customers to enable it.

Mobile Advertising is Getting Bigger—and More Challenging

The mobile ad market is booming. According to eMarketer, mobile will account for more than half of all U.S. digital ad spending in 2015—a year ahead of the forecast the same company’s analysts had made only a few months ago. Globally, more than $100 billion will be spent on ads served to mobile phones and tablets, a nearly 430% increase from 2013.

This is unquestionably good news for the mobile industry, a powerful affirmation of the potency of mobile advertising for customer acquisition. But it should also sound a note of caution, as the environment becomes increasingly noisy and cluttered

for app creators trying to reach potential customers. Marketers will need to work harder and smarter to reach customers without wasting money on poorly targeted impressions. For long-term success, app owners must also focus on building a strong customer base with greater retention, less churn and high lifetime value so they can grow their business rather than spinning their wheels. For publishers, the money flooding the mobile ad market can be seductive, but if they end up filling your inventory with non-relevant, low-value ads, they risk alienating both users and advertisers.

To build a mobile advertising industry that delivers quality and impact, not just scale for its own sake, both ad owners and inventory owners need a way to run campaigns tied to specific key performance indicators defined by the advertisers themselves. After all, the objective isn’t just to deliver as many impression as possible, regardless of the audience. It’s to reach the right people with the right app to drive success.

Why Data Matters More Than Ever

Data is transforming every aspect of advertising, as programmatic tools, data management platforms, and big data analytics transform the way marketers reach and engage their target customers.

Not long ago, media planners with mobile app clients would focus on driving as many downloads as possible through broad campaigns and run-of-network buys. Today, that same agency makes more sophisticated buys shaped by a more nuanced understanding of the app owner’s business. For one app, the ideal customer is between the ages of 25 – 34, willing to spend $10 per month on in-app purchases, and likely to engage regularly for at least six months. Another app’s creator might be more focused on generating a large number of in-app page views to support its own advertising model, subscriptions or brand awareness. Data makes it possible to target the users most likely to drive the KPIs most valuable for each app owner.

Several types of data come into play for targeting mobile ads. App owners often begin with their own internal and external user data. Inventory owners provide data on their audience and available impressions. Media planners provide campaign data including flight schedules and KPIs. Agencies use first-party and third-party data to create proprietary profiles on individual users, including demographic, preference and behavioral details. Just as importantly, performance data becomes available in the course of campaign delivery. Taken together, these data sources make it possible to make highly accurate predictions about how various users will respond to a given ad, and how they’ll use the app advertised once they’ve downloaded it.

The essence of Big Data is that volume drives accuracy. While it’s difficult or impossible to predict the behavior of a single individual, aggregated data about a large number of people makes it possible to predict trends across groups of similar individuals. This is the principle at the foundation of cohort analysis, a subset of behavioral analytics also known as nearest-neighbors collaborative filtering. By viewing audiences in terms of their constituent cohorts, rather than as a mass of individuals, we can identify the groups most likely to act in certain ways, and thus to deliver certain KPIs for advertisers.

YouAppi has implemented this methodology in Actionable Cohort Analysis, which provides predictive analytics powered by machine learning as part of our YouAppi OneRun™ platform. To begin with, we segment the more than 1.1 billion unique users in our inventory into channels including Travel, Entertainment, Gaming, Shopping, Utilities and Lifestyle, into cohorts based on common characteristics, usage behavior, and experiences.

Matching the right app to the right customer with cohort analysis

Productive Cohorts Conversion Funnel Channels Reach Cohorts Inventory

To learn more about each of these cohorts, we regularly perform deep Actionable Cohort Analysis across our entire inventory to detect patterns and trends clearly across the lifecycle of the consumers within them. This includes the types of device activities and apps that these individuals use over time, as well as their interest in other categories or sub-categories. This information makes it possible for us to perform predicative analytics to anticipate their response to various types of ads, enabling highly targeted, data-driven ad delivery.

When Consumers are Seen as Cohorts, Prediction of Users Behavior is Accurate and Successful

The ability to make accurate and specific predictions about user behavior makes it possible for app owners to define success on their own terms and specific the KPIs that matter most to their business.

These can include such metrics as: • Subscription/registration• Sale/in-app purchase• Purchases made within a given period of time• Number of items placed in a shopping cart • Room/flight bookings• Number of articles read• Number of pages visited• Social shares• Retention rate• Session time• Overall time spent on a site or app • Brand awareness

To meet these objectives, OneRun uses its behavioral prediction algorithm to detect the highest-value cohorts for the app’s program and the most productive channels to access it within YouAppi’s inventory. Over the course of campaign delivery, YouAppi receives performance data from the advertiser, including both installs and post-install actions, and analyzes these in light of the specified KPI and measurement criteria to continuously optimize the campaign’s effectiveness. In this way, app owners can achieve their mobile user acquisition goals more efficiently to maximize their ROI.

For app owners, cohort analysis makes it possible to target only qualified customers, reducing acquisition costs by as much as 68%. With ad delivery tailored to advertiser-specified KPIs, the customers who are acquired in this way deliver high lifetime value through the post-install actions that matter most to the business.

For inventory owners, cohort analysis provides a way to maximize eCPMs by matching the right apps to the right users, and dynamically optimize inventory yield for even better performance over time. Higher-relevance ads makes for a better user experience, helping publishers capitalize on the boom in mobile advertising without sacrificing their audience.

Cohort analysis offers powerful benefits for both app owners and inventory owners.

Week 1 ReferenceWeek 2 Week 3 Target0% 0.00%

Reference Target Cohort

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40% 2.00%

60% 3.00%

80% 4.00%

100% 5.00%

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Weekly Retention Levels Conversion Level

Week 5 Cohort

App owners need to be able to find the right users to build their business, while publishers need to provide a better, more relevant experience for their users. Cohort analysis puts the power of Big Data and behavioral analytics to work to enable unprecedented control over ad targeting based not just on raw numbers, but on the actual actions app owners want their new customers to take. Campaigns designed around specific KPIs increase conversions as well as customer lifetime value for better ROI and long-term growth. Implemented in the YouAppi OneRun platform, cohort analysis brings mobile advertising into a new era of impact and effectiveness.

Conclusion

A more mature and robust mobile industry calls for a more intelligent approach to advertising.

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