Anton Marchenko is VP of Marketing at Apalon, which was acquired by IAC, a large public media company, in 2014.
Apalon (represented by several different publishers) reported revenue for the first quarter of 2020 of $18 million. The total number of Apalon application downloads exceeds 600 million. The company has repeatedly been ranked among the top 10 developers of products for the App Store.
We talked with Anton about how marketing is structured at Apalon and how it promotes mobile applications.
We also discussed how the marketing budget is distributed and what marketing channels are used, whether it’s worth driving traffic from porn, whether real-time bidding advertising works, and much more.
— Anton, how does the marketing department at Apalon work? How many employees are there? What are they working on?
— At Apalon, marketing is one of the largest departments: about 50 people work in this direction.But this is not only Product Marketing. The department also includes User Acquisition managers, ASO/ Search specialists, specialists in monetization and localization, as well as motion and static designers, along with internal video production.
— I know that you have a growth hacking team — This is one person, actually.He collects all the needed information and makes sure that it is quickly and efficiently shared between the teams.
This is important because we have six product teams that work almost independently of each other.
It is not effective to check your hypotheticals on all products at once; it is better to check them on 2-3 products, find an area you can work on, and go ahead and develop it
A growth hacker is responsible for collecting information about the tests. Also in his area of responsibility, there are internal products for automation and split testing.
— Can you tell us how the budget is distributed between the channels?Most of the money, we spend on paid social marketing
— In our case, this is the ‘Big Four’: Apple Search Ads, Facebook, Google UAC, and Ocean Engine (a Chinese TikTok), a platform from Bytedance.Less than 20% goes to Ad Networks, Programmatic, bloggers, and ‘classic’ TV and podcast ads.
— What are the KPIs in the marketing department? — In our case, this is OKR (Objectives and Key Results).That’s not “revolutionary,” exactly, but it’s an interesting system. It’s more flexible and is primarily aimed at setting goals “from below” — from the teams to the business in general.
In the case of Apalon, we have annual business plans that are based on the company’s development vision and product development strategies in separate teams.
— What constitutes OKR at Apalon right now? — There are several objectives. The main one for marketing is Projected Profit, that is, the amount of profit that we must get for the year.Unfortunately, I can’t name the number, but I’ll say that we must achieve it with a margin target of 40%
Also, there are goals for the development of local markets, diversification of traffic channels, development of other stores, platforms, and the release of new products.
— Do you personally manage the marketing budget? — Yes, but it’s not a classic marketing budget, because we don’t have an upper limit that we cannot go beyond.To say it more simply, the amount of money is not limited, while we are able to spend it with a positive margin.
As for the ‘starting point,’ this is about corporate planning, which goes to the board of directors of the parent company. In this regard, we define approximate metrics for the year ahead and what we plan to spend and how much we plan to grow.
A financial model is built based on these data, then reconciled monthly and corrected according to the current situation.
— Does TikTok perform well in Asia only, or does it work everywhere? I’ve always perceived it to be more like Snapchat, entertainment for teens. — In general, it is. But the application itself is very different in the versions for China and the rest of the world. In terms of content, UX and more.In our case, Tik Tok in China works great even for utility apps that generally go after the ’35+’ group in the USA on Facebook.
But in our latitudes, TikTok is developing.
If once it was a very simple network for amateur creativity, TikTok is becoming more polished. The situation is similar to that of Instagram. At first, it was also absolutely trashy.
— Do you have a monthly or annual application budget? — Most likely annual, because we set profit goals a year in advance.But it all depends on the product.
We have stable products like NOAA Radar and Scanner for Me that are easy to predict from year to year.
With other applications, we may not rely on a product at the beginning of the year, but in the meantime something in the market changes and it starts to show great results.
We had that with the Sleepzy application, a ‘smart alarm clock’ that was doing ok in European markets but didn’t rise to the top of any lists. With the release in China and the start of campaigns on TikTok, it entered the company’s top 5 applications list by spending. Before that it was not even in the top 20.
— What is your minimum advertising budget for an application?When we just launch a product, we are ready to spend from $50,000 to $100,000 on it
— Sometimes more, sometimes less — it all depends on the metrics.
— When you spend such large amounts of money, is the goal to collect as many statistics as possible, then to analyze it, or are you immediately tuned to the result? — First, we want to collect a user base and check the basic metrics of the application.Second, we want to test the marketing funnel, especially the part after installation.
Well, and third, ad networks are designed so that you never get adequate numbers if you only spend $100.
It’s sad but true: the mobile business today is very expensive
Generally, successful Google User Acquisition Campaigns for a new application require a minimum of $10,000 per week.
With other channels, it is a bit easier, but in general, the situation is like that.
— If the product is already bringing in money, what will be the approximate budget for the month? — From half a million and up.If it takes around $10,000 a month to promote a product, we seriously think about not doing anything and closing it within a year.
The optimal marketing budget for a mobile app is between $100,000 to $200,000 per month; this is a good, strong, middling product
— How many times does a successful product pay off, for which you are ready to spend half a million? — We work with a margin of 40%, or, if anyone prefers the ROI indicator, 80%. — What are your ways of monetizing? What has proven itself best? — The basis is subscriptions.They bring the main income and allow the business to grow.
But we are actively testing alternative options. We don’t want to pay a “tribute” of 30% to Google or Apple.
Now, being at the top of Google Play or the App Store doesn’t make much sense, if you are not marketing a hyper-casual game.
In the case of utilities, the position in store search is much more important
But at the moment, in developed niches, getting into the top echelon is quite difficult.
Those who have better analytics and more accurate LTV forecasts feel better: the better you know how to predict, the more chances you have to make a lot of money in the long run.
— You once wrote that there’s no shame for apps in receiving traffic from porn sites. — That was more of a joke. But in general, there are the same ‘Male / Female 35+.’Anyone can start purchasing ads on PornHub
— Is Pornhub traffic expensive? Is there some kind of entry threshold? — No. Everything is exactly the same as with any other advertiser. They have everything automated and based on auction. For details, see TrafficJunky. But it makes sense to promote products that are tied to the specifics of the content.In terms of Pornhub ads, you could compare it to YouTube.
You control the age, geo, but don’t control the subject of the channels on which you will be posted. To adjust something, you need to take the trouble to designate exceptions.
It’s the same with Pornhub: if a person watches a video on the use of sex toys, he or she is not very interested in ads for a weather forecasting application. He or she didn’t come there for that. Well, also, don’t forget that we need to reach out to the user in 5-7 minutes. 🙂
— Do you have experience with using Real Time Bidding ad platforms? How do they work? — We have worked very little with such things. But when we did, we caught about 40-50% of the traffic, which was very irrelevant. — What services do you use for analysis? — We have internal services that we created ourselves.Everything is collected in one data warehouse and analyzed for patterns by our data engineers and data scientists.
— I know that an application in the App Store can receive the status of ‘App of the Day.’ Are there any methods to help you be chosen as the app of the day? — For us, this is a big mystery. We have several applications that regularly become the apps of the day, but to achieve this we don’t do anything at all.Recently, our Sleepzy app was the app of the day in 130 countries. NOAA Weather Radar was the App of the Day in the USA. A couple of other applications got similar positions in China.
When an editorial team likes some application, it includes it wherever it wants.
— What can you get out of receiving that status? — This thing is sudden and uncontrollable. It can bring a lot of traffic in one day, but it cannot have a serious effect in the long run.And in our experience, this traffic coming from the App of the Day is worse than any other
Indeed, in this situation, you show your product to millions of people, but it is interesting only to a small fraction of them.
And you have no control over whom to show it to.
— Does Apalon ever buy companies in its portfolio? — Yes, we have several projects in the portfolio that we bought, then tailored our marketing and analytical platforms to them.One of those successful apps is Productive.
In general, buying apps is not a key Apalon model.
These are one-time transactions that we initiate on our side. We are not ready for people to come to us and offer to buy their applications.
— What is Apalon’s strategic goal? Do useful things for people to make money? Or are you coming up with ideas and looking for what will work? — Something between those.In the case of Apalon, we are not striving to create a product that will become systemically important.
The same with NOAA Radar and Weather Live; they don’t change the paradigm of weather forecasts, but they make a person’s life better. A person will always check the weather. We give him or her a convenient way to do it. We have similar products in other reliable niches.
The main aim of Apalon is to find a niche that will live for at least 5-6 years and create a product that will be one of the best in it
— Can you tell us now what niches these might be? Where should developers of mobile applications invest? — Things like fitness, health — in the broad sense, including meditation and other things of this kind.After the coronavirus pandemic, many will decide that staying healthy at home is cool too. After 2-3 months of quarantine, user habits will change.
According to our survey of users from the USA, 93% of people who signed up for mobile fitness applications at the beginning of the quarantine plan to continue to do fitness at home. And 53% perceive fitness at home as a psychologically more comfortable training option than the gym.
No one is watching how fit you are; you can watch a movie while doing your routine, and it’s just cheaper.
The second niche you can invest in is photos and videos
Recently, all the innovations in the world of phones have been associated with photos. These are cameras, software for cameras, etc. And also AR, Computer Vision, and more.
In recent years, all the products that have become famous are somehow related to the photo. Applications involving aging, rejuvenation, conversion to the opposite sex.
You can also focus on niche things
Some applications are very successful in a narrow circle of people. For example, bookkeeping for entrepreneurs.
Technically, the application is not very complicated, this is not enterprise accounting, it is for a small number of people, but they will pay a lot of money, because there are no analogs, and they will use it for a very long time.
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